S&P rates new Stena notes BB-

Standard & Poor's said it lowered its senior unsecured debt rating on Sweden-based conglomerate Stena AB to BB- from BB and assigned its BB- rating to Stena's proposed $150 million notes issue due 2013.

The outlook is stable.

"This rating action was taken as the ratio of priority liabilities to total assets in the Stena group is expected to remain well in excess of 30% - Standard & Poor's threshold for a two-notch differential with the corporate credit rating," said S&P credit analyst Andreas Kindahl. "This is a result of high secured debt levels and continual high investment commitments."

The proceeds from Stena's proposed offering of $150 million (Swedish krona (Skr) 1.2 billion) of senior unsecured notes due 2013 will be used to refinance drawings under the group's credit facilities, which, on Oct. 6, were used to redeem Stena's senior unsecured $175 million 8.75% notes due 2007 for an aggregate cost of about $180 million.

At the end of September 2003 (pro forma for the new notes issue), Stena's senior unsecured debt was contractually subordinated to the company's approximately Skr8.3 billion secured interest-bearing debt (including financial and operating leases, but excluding liabilities in Stena's property division, which is non-recourse).

The notes are issued at the holding company level, and are therefore structurally subordinated to the group's operating liabilities of about Skr2.5 billion, which are almost all at the subsidiary level. At Sept. 30, Stena had operating lease-adjusted assets of about Skr25.8 billion (excluding the property division.

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