S&P lifts Reynolds to B+, debt to B-

S&P said it raised its corporate credit rating on Reynolds Group Holdings Ltd. to B+ from B.

The outlook is stable.

At the same time, the agency upgraded its issue-level rating on the company's unsecured debt to B- from CCC+. The 6 recovery rating remains unchanged, indicating an expectation for negligible recovery (0%-10%) in the event of payment default.

Additionally, S&P affirmed its B+ issue-level rating on Reynolds' senior secured debt after incorporating the proposed $500 million incremental senior secured term loan due 2023. Due to the pro forma increase in the company's secured debt from the proposed transaction, it revised the recovery rating on the debt to 3 from 2. The 3 recovery rating indicates an expectation for moderate (50%-70%; upper half of the range) recovery for lenders in the event of a payment default.

"The upgrade reflects the planned reduction in Reynolds' debt and the proposed refinancing, which will extend the company's debt maturities and decrease its future interest expense (because of the lower coupon rates)," S&P credit analyst Steven Mcdonald said in a news release.

"We expect that the company's credit measures will remain highly leveraged, including an adjusted debt-to-EBITDA metric of about 6.5x by year-end 2017."

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