S&P rates AutoNation notes BB+

Standard & Poor's said it affirmed the BB+ corporate credit rating on AutoNation Inc. and assigned a BB+ rating to its proposed $400 million senior note offering with a recovery rating of 4.

The outlook is stable.

Proceeds will be used to fund the tender for all of its $146 million, floating-rate senior notes due 2013 and its $132.6 million in 7% senior notes due 2014, and pay down about $80 million of its term loan facility.

Ratings reflect the view that AutoNation will be able to maintain current credit measures while preserving its moderate financial policy and ability to generate free cash flow into 2011, the agency said.

Ratings also reflect the company's fair business risk profile and significant financial risk profile, which are characterized by fair profitability and good cash flow protection, S&P said.

AutoNation's adjusted debt-to-EBITDA ratio was 3.1x for the year ended 2009.

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