S&P gives BB- to Avon notes

S&P said it assigned its BB- issue-level rating and 1 recovery rating to Avon International Capital plc’s proposed $350 million senior secured notes due 2022 and placed the issue-level rating on CreditWatch with developing implications.

The recovery rating indicates S&P’s expectation for very high recovery of principal in the event of a payment default.

“We expect that the company will use the proceeds from these notes to purchase and redeem its outstanding 4.6% senior notes due March 2020 through a tender offer. The notes are secured obligations that rank pari passu with Avon International Capital plc’s €200 million revolving credit facility due 2022 and Avon International Operations Inc.'s $500 million senior secured notes due August 2022.

“In addition to these debt instruments, Avon's capital structure also includes two tranches of unsecured notes due in 2023 and 2043,” S&P said in a news release.

The revision of CreditWatch on all of the company's existing debt tranches to developing from positive was taken because of the uncertain guarantee structure following the merger between Avon Products Inc. and Natura Cosmeticos SA, S&P said.

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