S&P rates RONA preferreds BB/P-3

Standard & Poor's said it assigned a BB global scale and P-3 Canadian scale ratings to RONA Inc.'s (BBB-/stable) proposed C$125 million cumulative five-year rate reset preferred shares.

"The BBB- long-term corporate credit rating, and stable outlook, on RONA reflect our view of the company's good market position established through a versatile multiple-format operating model and strong distribution capabilities, resilient operating profitability and cash flow generation in challenging market conditions, and management's commitment to maintaining an intermediate capital structure," S&P analyst Donald Marleau said in a statement.

"These factors are partially offset in our opinion by what we see as a competitive operating environment that exacerbates the industry's exposure to economic cycles," Marleau added.

Incorporating the preferred shares, RONA's pro forma adjusted debt-to-EBITDA ratio rose about 0.1x to 2.8x.

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