S&P rates Salini notes BB-

Standard & Poor's said it assigned a BB preliminary long-term corporate credit rating to Salini SpA

The agency also said it assigned a preliminary BB- rating to the company's proposed €350 million senior unsecured notes due 2018. The recovery rating on these notes is 5, indicating 10% to 30% expected default recovery.

The outlook is stable.

The rating assignment follows Salini's recent 88% acquisition of Impregilo SpA. The two companies plan to complete a reverse merger by the end of this year, S&P said.

The ratings are based on an assumption that in the next three months Salini will refinance most of about €700 million still outstanding on its secured acquisition financing facility through a combination of a new unsecured bank financing and issuance of the €350 million senior unsecured notes, the agency said.

The ratings reflect the company's fair business risk and significant financial risk, which are constrained by its exposure to the cyclical and capital-intensive construction market with high operational risks, S&P said.

The ratings also consider its limited product diversification in the infrastructure segment, significant exposure to the mature and stagnant Italian market and high country risks that it faces in Africa and South America, the agency added.

These risks are mitigated to a large degree by Salini's track record and experience in risk management and its consistently higher profitability than peers, S&P said.

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