Moody's: Sonoco notes Baa2

Moody's Investors Service said it assigned a Baa2 rating to Sonoco Products Co.'s $250 million 4.375% notes due 2021 and $250 million reopening of 5.75% notes due 2040.

The notes were issued to finance Sonoco's pending acquisition of Tegrant Corp.

The company's Baa2 senior unsecured rating, prime-2 commercial-paper rating and stable outlook are unaffected by the proposed acquisition, Moody's said.

The ratings continue to reflect the company's moderate revenue size, leading position in some of its market segments, strong credit metrics and demonstrated ability to maintain stable margins even in a difficult economic environment, the agency said.

While Sonoco's leverage will increase pro forma for the acquisition, Moody's said it expects earnings growth and free cash flow generation to return leverage metrics to the level more consistent with the Baa2 rating within the next 18 months.

The ratings also consider the company's recent focus on acquisitions and its exposure to cyclical end markets, Moody's added.

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