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Moody's rates Sappi notes Ba1
Moody's Investors Service said it assigned a Ba1 rating to the proposed issuance of €450 million senior unsecured notes due in 2026 by Sappi Papier Holding GmbH, a guaranteed subsidiary of Sappi Ltd.
Sappi's Ba1 corporate family rating, Ba1-PD probability of default rating and all other instrument ratings under Sappi Papier are unaffected.
The outlook is stable.
The Ba1 rating assigned to the Sappi Papier's new senior notes is in line with the company's Ba1 corporate family rating given that this layer of debt represents the majority of Sappi's capital structure, Moody's said.
The proposed notes will rank pari passu and benefit from the same upstream guarantees as Sappi Papier's €525 million revolving credit facility due in 2023, the agency said, as well as other senior notes issued by Sappi Papier Holding GmbH.
Upstream guarantees are provided on a senior basis by essentially all material operating subsidiaries of Sappi's international business, but exclude the South African operations, Moody's said.
The proceeds will be used to redeem the outstanding equivalent of the existing €450 million notes due in 2022, the agency said.
The refinancing will extend Sappi's debt maturity profile, but will not materially affect its leverage, Moody's said.
The ratings are supported by the company's sizable scale, leading market positions globally and solid geographic diversification, the agency said.
The ratings are constrained by the company's exposure to the graphic paper business, which is structurally declining in mature markets, subject to a fairly tough pricing environment and requiring constant restructuring and capacity reductions, Moody's said.
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