S&P rates Rexel notes BB-

S&P said it assigned a BB- rating and 5 recovery rating to the €500 million proposed senior unsecured notes due in 2025 to be issued by Rexel SA.

The 5 recovery rating indicates 15% expected default recovery.

The ratings reflect the notes' structural subordination to sizable prior-ranking liabilities, combined with a significant amount of unsecured and unguaranteed debt, limited protection offered to noteholders, no restricted payments covenants and reliance on payments from subsidiaries to service its obligations under the notes, S&P said.

The agency said it estimates recovery prospects at 15%, which provides limited headroom in the current recovery rating.

Rexel intends to use the proceeds of the proposed notes to redeem the existing €500 million senior unsecured notes due in 2022, S&P explained.

Additional debt will remain constrained only by a standard minimum 2x incurrence-based interest coverage ratio under the notes with significant carve-outs and permitted debt baskets, the agency said.

S&P also said it values Rexel as a going concern, reflecting the company's leading market positions with wide customer and end-market diversification.

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