Moody's cuts Sappi notes, gives PE Paper notes Ba2

Moody's Investors Service said it has assigned a provisional Ba2 rating to the proposed senior secured notes of up to $500 million due 2014 to be issued by PE Paper Escrow GmbH.

The agency added that the proceeds of the notes issuance will be applied to reduce outstanding indebtedness.

Based on the assumption that the new instruments will be successfully placed as proposed, the ratings of the outstanding $750 million of senior unsecured notes issued by the holding company Sappi Papier Holding GmbH have been downgraded to B2 from Ba3 due to the increasing proportion of secured debt in Sappi's capital structure ranking ahead and lower recovery prospects for the unsecured notes.

At the same time, Moody's said it affirmed the Ba3 corporate family rating and the probability of default rating of Sappi Ltd. with a stable outlook.

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