TEXT-S&P assigns 'BB' rtg to PVH Corp's $500M unscd notes
Dec 06 -
Standard & Poor's Ratings Services said today it assigned its 'BB' unsecured debt rating to New York-based PVH Corp.'s proposed $500 million senior notes due 2022, one notch below the 'BB+' corporate credit rating. At the same time, we are assigning our '5' recovery rating to the unsecured notes, reflecting our expectations of modest (10%-30%) recovery for the lenders in case of a payment default.
We expect the company to use net proceeds from this debt issuance to partially finance its pending roughly $3 billion acquisition of Warnaco Group Inc. We expect the transaction to be completed during the first quarter of 2013.
Our ratings on PVH, including our 'BB+' corporate credit rating, reflect our view that the company's financial profile will continue to be "significant" following the Warnaco acquisition, when the company will have pro forma debt-to-EBITDA leverage in the low- to mid-4x area. In addition, we believe the company's financial policy continues to be moderate, particularly as we expect the company to aggressively reduce acquisition-related debt with cash flow from operations consistent with past practices. We believe the company's business risk profile continues to be "satisfactory," reflecting the corporation's good market position as one of the larger apparel companies, its portfolio of well-recognized brands, and its growing geographic diversification.
RELATED CRITERIA AND RESEARCH
-- Methodology And Assumptions: Liquidity Descriptors For Global Corporate Issuers, Sept. 28, 2011
-- Business Risk/Financial Risk Matrix Expanded, Sept. 18, 2012
-- 2008 Corporate Criteria: Analytical Methodology, April 15, 2008
Corporate credit rating BB+/Stable/--
$500 mil. notes due 2022 BB
Recovery rating 5
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