Moody's rates Sappi notes Ba2

Moody's Investors Service said it affirmed the Ba3 corporate family rating of Sappi Ltd. and assigned a provisional Ba2 rating to the proposed senior secured notes worth $680 million to be issued by Sappi Papier Holding GmbH in two series due 2018 and 2021.

The outlook has been changed to positive from stable.

The ratings on Sappi's existing senior secured and senior unsecured debt remain unchanged, Moody's said, but the agency revised PE Paper Escrow GmbH's senior secured regular bond/debenture to LGD 3, 38% from LGD 2, 28% and senior secured regular bond/debenture to LGD 3, 38% from LGD 2, 28%.

Sappi Papier Holding's senior secured bank credit facility also was revised to LGD 3, 38% from LGD 2, 28% and senior unsecured regular bond/debenture to LGD 6, 94% from LGD 6, 91%.

The rating on the $500 million global bond maturing in 2012 is expected to be withdrawn following repayment, the agency said.

The affirmation reflects the considerable turnaround in Sappi's operating performance and credit metrics from the trough levels in 2009, Moody's said.

The agency noted that the recovery has in particular been driven by the group's South African and North American operations, which benefited from improved product pricing, higher demand levels and high pulp prices, the agency said.

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