Constellation Brands Inc.'s Proposed $400M Notes Rated 'BB+' (Recovery Rating: 3); Corporate Credit Rating Affirmed
- Victor, N.Y.-based Constellation Brands Inc. plans to issue $400 million of senior unsecured notes due 2022.
- We are assigning a 'BB+' senior unsecured debt rating and '3' recovery rating to the proposed notes.
- We are affirming our ratings on Constellation Brands, including the corporate credit rating at 'BB+'.
- The stable outlook continues to reflect our expectation that Constellation Brands' credit measures will remain within or near indicative ratio ranges for a "significant" financial risk profile.
NEW YORK (Standard & Poor's) April 10, 2012--Standard & Poor's Ratings Services assigned its 'BB+' issue level and '3' recovery ratings to Constellation Brands' proposed $400 million senior unsecured notes due 2022. At the same time, we affirmed our ratings on Constellation Brands, including the 'BB+ corporate credit rating. The outlook is stable. Constellation Brands will issue the notes under the company's Rule 415 shelf registration. Constellation Brands has indicated that it plans to use the net proceeds from this offering to reduce a portion of its outstanding indebtedness under its term loan, for working capital and other general corporate purposes, including share repurchases. The ratings on Constellation Brands reflect the company's "satisfactory" business risk profile and "significant" financial risk profile (as our criteria define the terms). Key credit factors considered in our business risk assessment include the company's diverse portfolio of consumer brands and historically strong cash generation in the highly competitive beverage alcohol markets, yet relatively narrow business and geographic focus. Our financial risk profile incorporates Constellation Brands' moderate financial policy, adequate liquidity, and key credit measures that we believe will remain within or near indicative ratio ranges for a significant financial profile. "We expect Constellation Brands' financial performance will be maintained despite lingering weak macroeconomic conditions, and its credit measures will remain within or near levels consistent with a significant financial risk profile," said Standard & Poor's credit analyst Jean Stout. RELATED CRITERIA AND RESEARCH
- Methodology And Assumptions: Liquidity Descriptors For Global Corporate Issuers, Sept. 28, 2011
- Key Credit Factors: Criteria For Rating The Global Branded Nondurable Consumer Products Industry, April 28, 2011
- Criteria Methodology: Business Risk/Financial Risk Matrix Expanded, May 27, 2009
- 2008 Corporate Criteria: Analytical Methodology, April 15, 2008
Complete ratings information is available to subscribers of RatingsDirect on the Global Credit Portal at www.globalcreditportal.com. All ratings affected by this rating action can be found on Standard & Poor's public Web site at www.standardandpoors.com. Use the Ratings search box located in the left column.
| Primary Credit Analyst: | Jean C Stout, New York (1) 212-438-7865; jean_stout@standardandpoors.com |
| Secondary Contact: | Chris Johnson, CFA, New York (1) 212-438-1433; chris_johnson@standardandpoors.com |
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