S&P rates International Paper notes BBB

Standard & Poor’s said it assigned a BBB rating to International Paper Co.’s proposed senior unsecured notes due 2026, 2035 and 2046.

International Paper expects to use a portion of the net proceeds from the note offering to repay up to an aggregate principal amount of not less than $750 million of its outstanding 7.5% notes due 2021; 7.95% notes due 2018; 9.375% notes due 2019; and 4.75% notes due 2022, as well as the 6.625% notes due 2018 of Temple-Inland Inc., a wholly owned subsidiary of the company.

The company also intends to use about $750 million of the proceeds to fund a contribution to its pension plans and for general corporate purposes, including repayment of debt, S&P said.

The company’s BBB corporate and issue level ratings reflect its position as the largest containerboard and corrugated products manufacturer in North America, good geographic and operating diversity and growing presence in industrial and consumer-packaging markets, the agency said.

The ratings also incorporate expectations for annual free cash flow of about $1.8 billion and credit measures in the intermediate category over the next few years with debt-to-EBITDA ratio of about 2.5x, S&P said.

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