TEXT-S&P rates United Rentals senior unsecured notes 'B+'
Oct 25 - Standard & Poor's Ratings Services said today that it has assigned its 'B+' issue-level rating to the proposed $400 million senior unsecured notes due 2023 to be issued by United Rentals (North America) Inc., a subsidiary of United Rentals Inc. (URI). URI is the guarantor of the notes. The rating is the same as the corporate credit ratings on United Rentals (North America) and URI. The recovery rating on this debt is '4', indicating our expectation of average (30%-50%) recovery in the event of a default scenario. We expect the company to use the proceeds from the new notes and additional borrowings under its asset-based loan revolver to redeem $500 million in 10.875% senior notes due 2016 and pay a call redemption premium. The issue-level ratings and recovery ratings for the company's existing debt remain unchanged. The company's "fair" business risk profile primarily reflects its leading position in the cyclical, highly competitive, and fragmented equipment rental industry. The ratings also reflect URI's "aggressive" financial risk profile. The largely debt-funded acquisition of RSC Equipment Rental Inc. (not rated) in April reflects URI's very aggressive financial policy, in our view. Pro forma for the transaction, as of Sept. 30, 2012, URI's total debt to EBITDA was approximately 4.4x, a level appropriate for the rating. RELATED CRITERIA AND RESEARCH -- Methodology: Business Risk/Financial Risk Matrix Expanded, Sept. 18, 2012 -- United Rentals Inc. Upgraded To 'B+' On Improved Credit Measures And Performance; Outlook Stable, Aug. 30, 2012 -- 2008 Corporate Criteria: Analytical Methodology, April 15, 2008 RATINGS LIST United Rentals (North America) Inc. Corporate Credit Rating B+/Stable/-- New Rating United Rentals (North America) Inc. $400 mil sr unsecd notes due 2023 B+ Recovery Rating 4 Complete ratings information is available to subscribers of RatingsDirect on the Global Credit Portal at www.globalcreditportal.com. All ratings affected by this rating action can be found on Standard & Poor's public Web site at www.standardandpoors.com. Use the Ratings search box located in the left column.
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