S&P rates LafargeHolcim notes BB+

S&P said it assigned a BB+ long-term issue rating to the proposed new subordinated securities to be issued by Holcim Finance (Luxembourg) SA, a 100% owned and controlled finance subsidiary of LafargeHolcim Ltd., which will guarantee the proposed notes.

The proceeds will be uses to redeem existing debt and improve the group's debt maturity profile, interest expense and leverage ratios, the agency said.

Following this issuance, LafargeHolcim's ratio of outstanding hybrids to adjusted capitalization will remain lower than the 15% limit for hybrid leverage as having intermediate equity content, S&P said.

The two-notch difference between the BB+ issue rating on the proposed hybrid notes and BBB issuer credit rating on LafargeHolcim reflects one notch for the notes' subordination due to LafargeHolcim's investment grade rating, the agency said.

The additional notch was for payment flexibility due to the optional deferability of interest, S&P said.

Although the proposed securities are perpetual, LafargeHolcim can redeem them any time between five years after the issue date up to the first reset date, the agency said, and on each annual interest payment date thereafter.

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