S&P: R.R. Donnelley notes BB-

Standard & Poor's said it assigned a BB- rating to R.R. Donnelley & Sons Co.'s proposed issuance of $350 million 10-year notes.

The notes have a recovery rating of 4, indicating 30% to 50% expected default recovery.

Pro forma leverage for the transaction will remain unchanged at 3.4x as Donnelley will use the proceeds from the issuance to tender for various portions of the company's senior notes due in 2018, 2019 and 2020, S&P said.

The ratings reflect the company's weak business risk profile and significant financial risk profile, the agency said.

Donnelley's traditional print operations are subject to long-term structural decline with volumes decreasing 1% to 2% and pricing declining roughly 2% to 3% annually, S&P said.

Donnelley has sought to counter these trends by diversifying into service-related businesses, but it remains unclear whether growth in these businesses will offset the secular declines plaguing the traditional printing businesses, the agency said.

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