S&P assigns BB+ to Nokia notes

S&P said it assigned its BB+ issue rating to the proposed unsecured notes to be issued by Nokia Corp. (BB+/stable/A-3).

The proposed notes consist of €500 million four-year unsecured and €750 million seven-year unsecured notes.

The new notes are non-callable for life.

The recovery rating is 3, indicating an expectation of meaningful (50%-70%; rounded estimate 60%) recovery prospects in the event of default.

The agency affirmed the BB+ issue ratings on Nokia's existing unsecured notes and revolving credit facility and the existing notes issued by Alcatel-Lucent USA Inc. (formerly Lucent Technologies Inc.). The recovery ratings remain at 3 (50%-70% recovery prospects; rounded estimate 60%).

S&P said the BB+ issue rating on the existing and proposed unsecured debt is supported by the group's maintenance of a very strong balance sheet, the view that Nokia is on track in integrating Alcatel-Lucent and the valuation of the group as a going concern.

“The key constraint on the recovery rating is the debt's continued structural subordination to sizable receivables factoring (which we estimate at about €2 billion), our adjustment for the pension deficit (to our estimated hypothetical default gross enterprise value), and the slightly larger amount of unsecured debt (by the end of the early tender period on March 7, only about $765 million of existing notes were tendered),” S&P said in a news release.

“These factors slightly dilute expected recovery for unsecured noteholders.”

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