S&P upgrades Ashland, rates notes BB-

Standard & Poor's said it assigned a BB- senior unsecured debt rating and a 5 recovery rating to Ashland Inc.'s proposed offering of $500 million of senior unsecured notes due 2022.

The 5 recovery rating indicates 10% to 30% expected recovery in a default.

The proceeds will be used with cash on hand to fund its tender offer for its $650 million secured 9 1/8% notes due 2017.

S&P also affirmed the company's BB corporate credit rating, BB- senior unsecured debt rating and B+ subordinated debt ratings.

The agency also said it raised the senior secured debt rating on Ashland to BB+ from BB and revised the recovery rating to 2 from 3.

These actions reflect the significant reduction in the amount of senior secured debt outstanding following the proposed refinancing.

The 2 recovery rating indicates 70% to 90% expected recovery in a default.

The outlook is stable.

The ratings reflect the company's satisfactory business risk profile and aggressive financial risk profile, S&P said.

The proposed refinancing, if successful, will significantly lower Ashland's borrowing costs and will extend debt maturities, the agency said.

The outlook is stable.

The acquisition enhanced Ashland's business risk profile through the addition of a substantial, high-margin specialty chemicals business and should reduce earnings cyclicality, the agency said.

S&P said it expects the proposed refinancing to result in a substantial reduction in interest expense.

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