Fitch affirms Avon

Fitch Ratings said it affirmed Avon Product Inc.'s long-term issuer default rating, bank credit facilities and senior unsecured notes at A- and its short-term issuer default rating and commercial paper at F2.

The outlook remains negative.

Avon announced it will acquire Silpada Designs, Inc. for an initial cash payment of approximately $650 million, a portion of which will be funded by additional borrowing. The transaction is expected to close in the third quarter.

Fitch said it had expected management to temper debt-financed share repurchases or sizeable acquisitions in the near-to-medium term given the company's lack of robust free cash flow generation, which hinders it from improving its financial flexibility. The debt-to-EBITDA is relatively modest, in the agency's view, but has increased sequentially from 1.5 times in 2007 to 2.1 times for the last 12 months ended March 31.

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