S&P revises Graphic recovery rating

S&P said it affirmed its BB+ issue-level rating on Graphic Packaging International LLC’s senior unsecured notes and revised the recovery rating to 4 from 3. The 4 recovery rating indicates an average (30%-50%; rounded estimate: 40%) recovery in default.

The recovery revision follows the company’s recent issuance of a $425 million term loan due January 2028, the agency said. The new term loan bears interest at a fixed rate of 2.67%, does not amortize and is pari passu with its other secured term loans.

Graphic Packaging used the proceeds, together with cash on hand, to redeem its 4¾% senior unsecured notes due 2021.

“Despite being a leverage-neutral transaction, the increase in the amount of secured debt in the company’s capital structure reduces our recovery expectations for the unsecured lenders in our hypothetical default scenario,” S&P said in a press release.

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