S&P: Fresenius loans BBB-; placed on watch

Standard & Poor's said it would keep its BB+ long-term corporate credit rating on Fresenius SE & Co. KGaA and subsidiary Fresenius Medical Care AG & Co. KGaA on CreditWatch negative, where it was originally placed on April 30.

At the same time, the agency said it assigned its BBB- issue rating to the proposed €1.85 billion and $1.6 billion senior secured credit facilities to be issued by Fresenius SE's subsidiaries Fresenius US Finance I, Inc. and Fresenius Finance II BV.

S&P said it also placed the issue rating on the proposed facilities on CreditWatch with negative implications. The recovery rating on the proposed facilities is 2, indicating an expectation of substantial recovery in the event of a payment default.

In addition, the agency said it would keep the issue ratings on the group's various existing debt instruments, including the senior unsecured notes, on CreditWatch negative.

The agency said the CreditWatch status continues to reflect Fresenius SE's intention to acquire Rhon-Klinikum AG for approximately €3.1 billion and to assume about €800 million of Rhon-Klinikum's outstanding debt. According to S&P, the company will fund the acquisition with about €1,000 million of equity and a large amount of debt, which will lead to an increase in leverage.

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