Fitch rates IHO-V notes BB+

Fitch Ratings said it assigned an expected senior secured debt rating of BB+ to IHO Verwaltungs GmbH's (IHO-V) proposed senior secured PIK toggle notes.

The agency also affirmed IHO-V's long-term issuer default rating at BB+ with a stable outlook.

Fitch also said it affirmed Schaeffler AG's long-term issuer default rating at BBB- with a stable outlook.

IHO-V is Schaeffler's immediate parent and 75.1% owner, the agency noted.

The proposed notes are rated at the same level as IHO-V's long-term issuer default rating, assuming average rates of recovery available to creditors in the event of bankruptcy, Fitch said.

IHO-V expects to issue €2.1 billion of notes split into three tranches denominated in euros or dollars, the agency said.

The proposed notes will be senior secured obligations of IHO-V, ranking pari passu with its existing notes and obligations under the senior facilities agreement, Fitch said.

The proceeds will be used to partly fund a cash tender offer for the outstanding euro- and dollar-denominated notes due in 2021 and 2023, the agency said.

S&P said it expects the average maturity to increase, as well as lower its maturity concentration.

The ratings reflect the company's solid business risk profile, adequate financial structure and significant financial flexibility, the agency said.

The ratings also consider the weaker financial risk profile of the consolidated group relative to Schaeffler's standalone financial risk profile, Fitch said.

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