Moody's rates Packaging notes Baa3

Moody's Investors Service said it assigned a Baa3 rating to Packaging Corp. of America's new $150 million 6 ½% senior notes due 2018 and senior unsecured regular bond/debenture, along with a provisional Baa3 to its senior unsecured shelf. The agency also affirmed the ratings on the company's existing debt.

The outlook is stable.

Net proceeds from the offering, together with cash on hand, will be used to repay all of the company's outstanding 4 3/8% senior notes due 2008. The new notes will be unsecured and will rank equally in right of payment with all of the company's existing and future senior unsecured indebtedness.

The ratings reflect the company's strong track record of profitability, the company's solid debt protection metrics and the expectation of continued strong financial performance, Moody's said.

Credit challenges include its lack of scale and diversity, senior management succession concerns and the uncertain economic environment, the agency said.

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