Moody's raises Rockwood secured ratings to Baa3

Moody's Investors Service said it upgraded the senior secured ratings of Rockwood Specialties Group, Inc. to Baa3 (LGD2, 20%) from Ba1 (LGD3, 38%).

The action follows the decision by Rockwood to upsize the amount of senior unsecured notes due 2022 that it is issuing to $1.25 billion from $750 million. The additional $500 million of notes will be split between repaying existing term loan debt and cash to be retained on the balance sheet.

The $250 million reduction in term loan debt reduces the proportion of secured debt in the capital structure enough to support a one notch upgrade from the corporate family rating.

Rockwood's Ba1 corporate family rating and Ba2 senior unsecured rating remain unchanged.

The outlook is stable.

Rockwood's Ba1 corporate family rating assumes that this excess cash will be eventually used for additional acquisitions or to reduce the remaining term loan debt, the agency noted.

The company has a senior notes due 2020 rating of Ba2 (LGD5, 75% from 82%).

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