S&P cuts HRG Group view to negative

S&P said it revised its CreditWatch implications on the B issue-level rating on HRG Group Inc.'s $890 million senior unsecured notes due 2022 to negative from positive.

“The rating action reflects our revised view that the notes are unlikely to be paid off in conjunction with the planned merger of HRG Group Inc. and its core subsidiary Spectrum Brands, which we assume will occur this summer,” S&P said in a news release.

“We now expect the notes to remain outstanding at the time of the merger as a structurally subordinated obligation of HRG Group Inc., lacking any contractual guarantee by Spectrum Brands Inc. (B+/stable/--). It is likely following the merger that we will lower the rating on HRG's senior unsecured debt to B- from B.”

S&P said its B corporate credit rating on HRG Group remains on CreditWatch with positive implications. “We expect to raise this rating to B+ (the same as our corporate credit rating on subsidiary Spectrum Brands Inc.) following the merger, reflecting our view that the subsidiary will drive the group credit profile,” the agency said in the release.

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