S&P rates Diamond (BC) loans, notes B

S&P said it assigned its B corporate credit rating to Diamond (BC) BV. The outlook is stable.

At the same time, S&P assigned a B issue-level rating (the same as the corporate credit rating) to Diamond's proposed first-lien credit facilities, consisting of a $250 million revolver, $900 million term loan and €820 million term loan. The revolver is scheduled to mature in 2022, followed by the two term loans in 2024.

The recovery rating on these facilities is 3, indicating an expectation of meaningful (50% to 70% range; rounded estimate 55%) recovery in the event of a payment default.

S&P also assigned a B issue-level rating (the same as the corporate credit rating) to Diamond's proposed €545 million senior unsecured notes. The recovery rating on the notes is 4, indicating an expectation of average (30% to 50% range; rounded estimate 30%) recovery in the event of a payment default.

“The ratings on Diamond reflect the company's relatively stable end-markets and good diversification. Partially offsetting these strengths are the fact that Diamond's margins lag behind market leader EcoLab Inc.'s, as well as its high leverage pro forma for the acquisition of the company's businesses,” said S&P credit analyst Michael McConnell in a news release.

“In addition, we expect Diamond to have aggressive financial policies given the company's financial sponsor ownership by Bain Capital. We expect Diamond's adjusted debt to EBITDA to remain above 5x in 2017 and 2018.”

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