TEXT-S&P rates Grupo KUO notes 'BB'

Tue Nov 20, 2012 1:23pm EST

Related Topics

Nov 20 - Standard & Poor's Ratings Services assigned today its 'BB' senior
unsecured debt rating to Grupo KUO S.A.B. de C.V.'s (KUO;
BB/Stable/--) proposed $250 million notes due 2022. At the same time, we
assigned a recovery rating of '3' to the notes, indicating our expectation of
meaningful (50% to 70%) recovery in the event of default. The notes will be
denominated in dollars and are expected to be issued in December 2012. The notes
will benefit from unconditional guarantee from KUO's main operating subsidiaries
and will rank pari passu in right of payment to all existing senior debt. The
company will use proceeds to refinance existing senior unsecured notes due 2017
for the same amount, improving the average debt life to about seven years from
about five.

Our 'BB' corporate rating on KUO reflects our assessment of the company's 
business risk profile as "fair" and its financial risk profile as significant. 
In our view, the ratings are constrained by the single-digit operating 
margins, the cyclicality in some of its core businesses, particularly 
chemicals and automotive, foreign-exchange fluctuations, and its exposure to 
the volatility of its raw materials prices. Those factors are offset by the 
company's strong market shares in its businesses, improved product and 
geographic diversification through acquisitions and a comfortable debt 
maturity schedule. 


RELATED CRITERIA AND RESEARCH

     -- Grupo KUO, S.A.B. de C.V. 'BB' Global Scale, 'mxA' National Corporate 
Credit Ratings Affirmed; Outlook Remains Stable, June 5, 2012.
     -- 2008 Corporate Criteria: Analytical Methodology, April 15, 2008.


RATINGS LIST

Grupo KUO S.A.B. de C.V.
  Corporate credit rating           BB/Stable/--


Rating Assigned

Grupo KUO S.A.B. de C.V.
  $250 million notes due 2022       BB
   Recovery rating                  3



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.
FILED UNDER:
A couple walks along the rough surf during sunset at Oahu's North Shore, December 26, 2013. REUTERS/Kevin Lamarque

Find your dream retirement town

Florida? Hawaii? Reuters has teamed up with Zillow to give you the power to customize a list of your best places to retire.  Video | Full Article