S&P rates Sappi notes BB

S&P said it assigned a BB rating to the €450 million 3 1/8% senior unsecured notes due 2026 issued by Sappi Papier Holding GmbH and guaranteed by Sappi Ltd.

The notes rank pari passu with all of the company's other unsecured, unsubordinated debt outstanding, S&P said.

The recovery rating on the notes is 3, indicating 50% to 70% expected default recovery.

All of the other ratings on Sappi and Sappi Papier are unchanged.

The company intends to use the proceeds from these notes to redeem its €450 million 3 3/8% callable senior secured notes due 2022.

The new transaction does not change the view of the company's credit quality, S&P said.

This is because the transaction is largely leverage neutral, the agency said, and Sappi is expected to maintain an adjusted credit metrics close to current levels.

The ratings reflect the company's large scale and geographic diversification, S&P said, and its increasing exposure to specialty and packaging paper to balance.

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