Moody’s gives Ba3 to Alcoa Nederland, notes

Moody's Investors Service said it assigned a Ba3 corporate family rating and a Ba3-PD probability of default rating to Alcoa Nederland Holding BV.

At the same time, the agency assigned a Ba3 rating to Alcoa Nederland's proposed senior unsecured notes.

Moody's also assigned a speculative grade liquidity rating of SGL-2.

The outlook is stable.

Alcoa Nederland is a wholly owned subsidiary of Alcoa Upstream Corp. Alcoa Upstream is currently a wholly owned subsidiary of Alcoa Inc. Alcoa is separating into two companies: Alcoa Upstream, which will hold the bauxite, alumina, aluminum, cast products and energy business as well as the rolling operations in Warrick, Ind., and Alcoa Inc.'s 25.1% interest in the Ma'aden Rolling Co., and Arconic (the surviving Alcoa entity that will be renamed Arconic) consisting of global rolled products, engineered products & solutions and transportation and solutions, the value added segments which specialize in auto sheet and products for the aerospace, transportation, building and construction and other industries.

Alcoa plans to distribute at least 80.1% of the issued and outstanding shares of Alcoa Upstream, separating the upstream business from the value add midstream and downstream businesses.

The notes will be issued by Alcoa Nederland and prior to the separation will be guaranteed only by Alcoa Upstream. Post separation, the notes will be guaranteed by Alcoa Upstream and restricted subsidiaries and have the same guarantee structure as the unrated $1.5 billion secured revolving credit facility.

Proceeds will be deposited into an escrow account together with cash amounts sufficient to meet all interest payments on the notes to separation. Should the separation be abandoned or not close by April 3, 2017, the notes will be redeemed together with accrued interest.

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