S&P rates Levi Strauss notes B-

Standard & Poor's said it assigned a B- rating to Levi Strauss & Co.'s proposed $470 million senior notes due 2016 and euro-denominated 8 5/8% senior notes due 2013. The company's B- corporate credit rating, B- senior unsecured notes, BB- $650 million revolving credit facility due 2007 with a recovery rating of 1+ and B+ $500 million term loan due 2007 with a recovery rating of 1 were affirmed.

The outlook is stable.

Proceeds from the notes will be used to repay the company's secured $500 million term loan.

S&P said the ratings reflect the company's improved operating performance and enhanced liquidity profile and the agency's expectation that these trends will continue.

The ratings on Levi Strauss also reflect its highly leveraged financial profile, its participation in the intensely competitive denim and casual pants market and the inherent fashion risk in the apparel industry. The agency is also concerned as to whether management can sustain the company's positive operating momentum and revitalize core Levi's and Dockers sales. Leverage was 4.3x at Nov. 27.

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