Moody's rates Rhodia note B2

Moody's Investors Service said it affirmed Rhodia SA's B1 corporate family rating, B2 senior unsecured debt rating and B3 senior subordinated debt rating following the tender announced by the company for its €118 million 10½% senior unsecured notes, €700 million 8% senior unsecured notes and $200 million 7 5/8% senior unsecured notes. Moody's expects the notes to be fully repaid by the end of October.

The agency also assigned a provisional B2 rating to the proposed €1.1 billion senior unsecured floating-rate notes to be issued by the company, the proceeds of which will be used to fund the tender offer.

The outlook is stable.

Moody's said the provisional B2 rating assigned to the proposed notes was notched down from the B1 corporate family rating to reflect the effective subordination of the notes to secured debt and debt issued by operating subsidiaries within the group. The notes will rank pari passu with the remaining senior unsecured notes due 2010 and ahead of Rhodia's senior subordinated notes due 2011. The agency said it expects that Rhodia may further reduce its secured debt and facilities raised at the operating level over time.

The announced refinancing is a first step toward achieving a more favorable financing structure, in Moody's view, because it is expected to allow some cash interest savings, extend maturity and allow greater operating flexibility.

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