S&P: Sappi Papier notes BB-

Standard & Poor’s said it assigned a BB- rating to the proposed €350 million senior secured notes due 2023 to be issued by Sappi Papier Holding GmbH, an indirect holding company of Sappi Ltd.

The rating is in line with the long-term corporate credit rating on Sappi, S&P said.

The 3 recovery rating on the notes, which indicates 50% to 70% expected default recovery, reflects the significant amount of prior-ranking liabilities in the structure, the agency said, and the substantial amount of secured debt.

S&P also said it affirmed the company’s BB- rating and 3 recovery rating on the existing €465 million revolving credit facility, $400 million senior secured notes due 2017 and €450 million senior secured notes due 2022.

The B rating and 6 recovery rating on the $250 million senior unsecured notes due 2032 is unchanged.

The proceeds will be used to fully repay the existing $350 million 6 5/8% senior secured notes due in 2021.

The ratings on Sappi are constrained by the company’s large exposure to structurally declining European paper markets and cyclical cash flow generation, the agency said.

The ratings are supported by its strengthening financial profile and strong liquidity position, S&P said.

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