Moody’s rates Valvoline Finco CFR Ba2, bonds Ba3

Moody's Investors Service said it assigned a Ba2 corporate family rating to Valvoline Finco Two LLC, a newly created wholly owned subsidiary of Ashland Inc. that will later be merged into Valvoline Inc. and separated into an independent, free-standing company consisting of the Valvoline-related businesses.

The IPO to effect partial separation is expected to occur in the fall.

The agency also assigned a Ba3 rating to the new $375 million unsecured bonds to be issued by Finco Two. The bonds are guaranteed by Ashland but the guarantee will automatically be released following Ashland's transfer of the Valvoline business to Valvoline Inc. and the assumption by Valvoline Inc. of Finco Two's obligations under the bonds.

The outlook is stable.

Moody’s said the Ba2 corporate family rating anticipates successful completion of the IPO, expected to be completed sometime in the fall, with net proceeds used to reduce debt at Valvoline to $750 million.

In the absence of the successful IPO, and if all other factors are virtually unchanged, Moody's said it would reduce Valvoline's corporate family rating one notch to Ba3, possibly with a negative outlook.

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