S&P gives Domtar loan BB

Standard & Poor's said it assigned its bank loan and recovery ratings to Domtar Corp.'s $1.55 billion credit facilities.

The $800 million term loan and $750 million revolving credit facility are rated BB, one notch higher than the corporate credit rating, with a recovery rating of 1, the agency said.

According to the agency, the ratings on Domtar reflect the company's aggressive financial risk profile and its unstable profitability and cash flow caused by volatile prices for its commodity paper, pulp and lumber products.

These weaknesses are offset by the company's strong position in the concentrated uncoated freesheet market and its good cost profile, S&P added.

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