S&P rates International Paper notes BBB

S&P said it assigned its BBB issue-level ratings to International Paper Co.'s proposed senior unsecured notes due 2027 and 2047.

The company will use the proceeds, along with bank borrowings, borrowings under its committed credit facilities and available cash, to fund its proposed acquisition of Weyerhaeuser Co.'s pulp business.

S&P said the BBB corporate credit rating reflects International Paper’s position as the largest containerboard and corrugated products manufacturer in North America, its good geographic and operating diversity and its growing presence in the industrial and consumer packaging markets.

The rating also incorporates the agency’s expectation that the company's credit measures will remain in the intermediate category over the next two years, specifically an adjusted debt-to-EBITDA leverage metric of about 2.5 times to 3.5 times.

While it expects that International Paper's leverage metric will increase above this range following the close of the acquisition, S&P said it believes management will undertake some debt reduction, which – along with additional EBITDA from the acquisition – should restore the company's adjusted debt-to-EBITDA metric to around 2.5 times to 3.5 times, the appropriate range for the current rating.

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