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Moody's lowers some RBS Global notes
Moody's Investors Service said it changed RBS Global, Inc.'s probability-of-default rating to Caa1/LD from Ca, changed its $79 million (originally $150 million) senior unsecured notes due 2016 to Caa2 (LGD4, 59%) from Caa3 (LGD2, 26%) and lowered its $300 million senior subordinated notes due 2016 to Caa3 (LGD6, 91%) from Caa2 (LGD5, 83%) and $802.5 million senior unsecured notes due 2014 to Caa2 (LGD4, 59%) from Caa1 (LGD4, 52%).
The Caa1 corporate family rating, SGL-3 speculative-grade liquidity rating, B1 (LGD2) $908 million (originally $960 million) senior secured bank credit facility and Caa2 (LGD4) $196.3 million senior unsecured notes due 2014 were affirmed, but the loss-given-default rate was changed to 15% from 13% for the credit facility and to 59% from 61% for the notes.
The outlook is stable.
The rating actions follow the closing of the company's exchange offer for a portion of its outstanding debt at values below par. RBS indicated that it issued $196.3 million of new senior unsecured notes due 2014 for $71 million of senior unsecured notes due 2016 and $243.6 million of PIK toggle notes and loans due 2013 issued by parent company Rexnord Holdings, Inc. Moody's will remove the LD component of the probability-of-default rating after three business days.
The agency said the Caa1 corporate family rating incorporates its view that RBS Global's credit metrics will remain highly speculative in spite of the reduction of approximately $118.3 million of debt, representing about 5% of the company's total debt.
The severity of the downturn in the global economy is negatively impacting RBS' water management and power transmission businesses, Moody's said, and the non-residential construction industry, the main driver of its water management business, is likely to remain weak through at least mid-2010.
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