S&P rates Spectrum notes BB-

S&P said it assigned its BB- issue-level rating to Spectrum Brands Inc.'s proposed €375 million senior unsecured notes due 2026.

Proceeds from the leverage-neutral transaction, which includes the proposed notes and about $100 million of cash and borrowings under the company's revolving credit facility, will be used to satisfy the cash tender offer announced Sept. 13 for the $520 million 6 3/8% senior unsecured notes due 2020.

The recovery rating on the proposed notes is 4, indicating that creditors could expect average (30% to 50%, in the lower half of the range) recovery in the event of a payment default.

The proposed notes will be guaranteed on a senior unsecured basis by Spectrum Brands' domestic subsidiaries and its immediate parent holding company (SB/RH Holdings LLC).

Debt outstanding pro forma for the proposed transaction is about $4 billion.

All existing ratings on the company, including the BB- corporate credit rating, are unchanged.

The outlook is stable.

S&P said the ratings incorporate Spectrum Brands’ good product diversity, its modest scale, operating leverage and profitability; and its position as a provider of lower-priced products, which possess less pricing power than premium priced competition; however, they tend to perform relatively well in sluggish economic environments.

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