Moody's rates ENCE notes B1

Moody's Investors Service said it assigned a provisional (P)Ba3 corporate family rating to ENCE Energia y Celulosa SA and a provisional (P)B1 (LGD4, 63%) rating to its proposed €250 million senior secured notes due 2020. The outlook is stable.

ENCE will use proceeds to repay existing bank borrowings and related interest hedges.

The agency said the (P)Ba3 corporate family rating is based on the company's relatively small size in relation to some of its peers, its limited geographic diversification, its low segmental diversification and the inherent volatility of the pulp industry.

More positively, the (P)Ba3 rating also reflects ENCE's position as the largest hardwood market pulp producer in Europe, a market that remains heavily reliant on imports with a solid focus on the rather stable tissue end market, and increasing contribution from alternative energy operations, Moody's said.

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