S&P rates Avon revolver, notes BB-

S&P said it assigned its B corporate credit rating to Avon International Operations Inc.

The outlook is stable.

Concurrently, the agency assigned its BB- issue-level rating to Avon's existing $400 million senior secured revolving credit facility expiring 2020 and proposed $400 million senior secured notes due 2022. The recovery rating for these senior secured facilities is 1, indicating an expectation for very high (90%-100%) recovery in the event of a payment default.

Avon is the issuer of the proposed $400 million senior secured notes as well as the borrower under the company's existing $400 million senior secured revolving credit facility.

Avon Products Inc. plans to use proceeds from the note offering, along with about $250 million of cash, to purchase up to $650 million in aggregate principal of the company's 5¾% unsecured notes due March 2018, 4.2% unsecured notes due in July 2018, 6½% unsecured notes due in March 2019 and 4.6% unsecured notes due in March 2020.

Pro forma for the transaction, S&P expects Avon Products' debt leverage to improve toward mid-5 times at the end of 2016, from about 6 times prior to the notes offering and planned tender offer. The agency expect credit metrics to remain weak for the next several years given its need to reinvest in its business and weak profitability.

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