S&P rates Coty facilities BBB-

S&P said it assigned a BB+ corporate credit rating to Coty Inc.

The outlook is stable.

The agency also said it assigned a BBB- rating and 2 recovery rating to the company's credit facilities, which have a total value of about $8.4 billion.

Coty has completed its merger with Procter & Gamble Co.'s fragrance, color cosmetics and hair color business, S&P said.

Coty issued $4.5 billion; Galleria Co., which holds the P&G beauty assets, issued $3.4 billion; and Coty BV issued €465 million, S&P explained.

The Coty facility comprises a $1.5 billion secured five-year revolving credit facility, $1.75 billion five-year term loan A and $500 million and €665 million seven-year term loan B.

The Galleria facility consists of a $1.5 billion five-year senior secured revolving credit facility, $900 million five-year term loan A and $1 billion seven-year term loan B.

Coty BV's facility consists of a €140 million five-year term loan A and €325 million seven-year term loan B.

Each of the facilities will be cross-guaranteed and cross-collateralized, S&P said.

The 2 recovery rating indicates 70% to 90% expected default recovery.

The ratings reflect the company’s leading market positions, strong diversity of products, channels and territories, strong cash flow generation capabilities, participation in growing cosmetics industry and moderate leverage, the agency said.

The ratings also consider the potential execution difficulties that Coty's management will face in merging the company with a larger entity that has underperformed the market for more than three years, S&P said.

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