S&P cuts R.R. Donnelley to junk, rates notes BB+

Standard & Poor's said it lowered R.R. Donnelley & Sons Co.'s corporate credit rating to BB+ from BBB-, along with its commercial paper rating to B-1 from A-3.

The agency also said it assigned a BB+ rating to the company's proposed $500 million unsecured notes due 2018 with a recovery rating of 3, indicating 50% to 70% recovery in a default.

The proceeds will be used to fund tender offers on existing debt.

The outlook is stable.

The ratings reflect an expectation that over the long term, the company will deploy debt and cash flow to pursue strategic acquisitions and operate as a consolidator in the industry, while also continuing share repurchases, S&P said.

The agency said it regards the business profile as satisfactory based on the company's market position and efficiencies associated with its critical mass, notwithstanding secular decline in several of the company's products.

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