S&P rates Adient notes BB

S&P said it assigned a preliminary BB rating and 5 recovery rating to Adient plc's proposed $2 billion senior unsecured notes, which will be issued by Adient Global Holdings Ltd.

The 5 recovery rating indicates 10% to 30% expected default recovery.

The company expects to issue the bonds in two tranches, a dollar-denominated tranche due 2026 and a euro-denominated tranche due 2024.

S&P said it will convert the preliminary ratings to final ratings within 90 days of the consummation of Adient's spin-off into a separate, independent, publicly traded company following Johnson Controls' transfer of the global assets, liabilities and operations of its automotive seating and interiors businesses.

Though the notes will not be guaranteed upon issuance, the agency said it will be guaranteed on an unsecured and unsubordinated basis by Adient.

The proceeds from these bonds will be held in escrow until the spin-off and then Adient will assume the obligation of the notes and use the proceeds to pay a $3 billion dividend to Johnson Controls, S&P said.

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