S&P rates RSI Home notes B+

Standard & Poor's said it assigned a B+ corporate credit rating to RSI Home Products Inc. The outlook is stable.

At the same time, S&P assigned a B+ issue-level rating (the same as the corporate credit rating) to the company's proposed $525 million senior secured second-lien notes due 2018 with a recovery rating of 3, indicating an expectation of meaningful (50% to 70%) recovery for lenders in the event of a payment default.

"The corporate credit rating on RSI Home Products Inc. (RSI) reflects what we consider to be RSI's 'weak' business risk profile. We view the company's business risk profile as weak due to the company's very narrow customer base of two customers that comprise 98% of sales (Home Depot & Lowe's), RSI's relatively small size, narrow product breadth limited to kitchen, bath and storage cabinets, vanities, and counter-tops, and its exposure to cyclical home repair and remodeling trends," said credit analyst Thomas Nadramia in a new release.

"These factors are somewhat offset by the company's long history as significant suppliers to Home Depot and Lowe's, its solid position in the 'in-stock' category of kitchen cabinets and bath vanities, relatively consistent sales and earnings through recessionary periods, and low cost manufacturing operations."

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