S&P: Constellium bond CCC+

S&P said it affirmed the B- long-term corporate credit rating on Constellium NV.

The outlook remains negative.

The agency also said it assigned a CCC+ rating and 5 recovery rating to the company's proposed $625 million senior unsecured bond due in 2025.

S&P said it affirmed the CCC+ ratings on Constellium's existing senior unsecured debt, including its €300 million bond due 2021, €240 million bond due 2023, $400 million bond due 2023, and $400 million bond due 2024. The recovery rating on these unsecured issues remains at 5.

The agency said it affirmed the B+ rating on the company's $400 million senior secured bond due 2021. The recovery rating on that issue is 1.

S&P also said it placed the CCC+ long-term corporate credit rating on Wise Metals Intermediate Holdings LLC on CreditWatch with positive implications.

Wise Metals is a fully owned subsidiary of Constellium NV.

The agency also said it affirmed the CCC+ rating with a recovery rating of 4 on the $650 million senior secured bond due 2018 co-issued by Wise Metals Group LLC and Wise Alloys Finance Corp., which is expected to be repaid.

S&P said it withdrew the CCC- rating on the $150 million payment-in-kind toggle notes co-issued by Wise Metals Intermediate and Wise Holdings Finance Corp., as these notes have been repaid. The recovery rating had been 6.

These rating actions reflect a view that Constellium is currently addressing its unsustainably high financial leverage at its subsidiary, Wise Metals, and it is integrating the company’s operations fully into the group structure, the agency said.

S&P said it considers the proposed refinancing of Wise Metals' $650 million senior secured bonds due December 2018 through a $625 million senior unsecured bond offering at Constellium.

This follows the repayment of Wise Metals' $150 million payment-in-kind toggle notes in November 2016.

Wise Metals' ABL facility terms are expected to be amended to allow for upstream guarantees to the Constellium group.

The B- corporate credit rating on Constellium continues to reflect the group's very high leverage with an adjusted debt-to-EBITDA ratio of about 8x for 2016, the agency said.

The ratings also consider negative free cash flows in the coming years, S&P said.

The company has ambitious – though slightly downsized – investment programs in all its business lines, the agency said.

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