Fitch rates Rexel at BB-

Fitch Ratings said it assigned Rexel, SA a long-term issuer default rating of BB- with a stable outlook and a short-term issuer default rating of B and its proposed €500 million high-yield bond offering an expected senior unsecured rating of BB-.

Despite its exposure to the highly cyclical demand in the construction and industrial sectors, Rexel benefits from an enhanced financial flexibility, which mainly stems from the past nine months' repayment of debt, according to the agency.

"Despite the group's low-margin nature as a distribution business, Rexel has proved to be cash-generative during the economic downturn," Pablo Mazzini, a senior director at Fitch, said in a statement.

"Moreover, the application of excess liquidity to debt redemption while financing its cost restructuring measures from internally generated cash demonstrates the strength of the business model."

Fitch said it expects leverage to fall to 4.8x by 2011 from its peak of 5.8x in the 12 months to the second quarter.

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