S&P raises Ashland notes to BB

Standard & Poor's said it raised its issue-level rating on subordinated notes issued by Hercules Inc. (a subsidiary of Ashland Inc.) to BB from B+, which is the same as the corporate credit rating on Ashland.

At the same time, the agency revised its recovery rating on the Hercules subordinated notes to 3 from 6, indicating an expectation of meaningful (50%-70%; upper half of the range) recovery in the event of a payment default.

All other ratings on Ashland are unchanged.

S&P said the rating changes result from its ongoing surveillance on Ashland and reflect an improved understanding of Ashland's debt, capital, and organizational structure.

Under the agency’s revised analysis, the Hercules debentures represent structurally senior claims (relative to Ashland's credit facilities and senior notes) against the portion of the recovery value we attribute to Hercules, which improves their recovery prospects. Although the debentures are contractually subordinated, the contractual subordination applies only to Hercules' debt obligations.

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