S&P rates Magna International notes A-

S&P said it assigned its A- issue-level rating to Magna International Inc.'s (A-/stable/A-2) proposed senior unsecured notes.

S&P expects gross proceeds raised from the proposed notes offering to be about US$1.6 billion, consisting of US$800 million notes (two tranches), C$350 million notes (about US$257 million) and €550 million notes (about US$587 million).

“We expect Magna to use the proceeds primarily to fund its acquisition of Veoneer Active Safety for about US$1.5 billion, and use the proceeds from the proposed euro-denominated notes to redeem its existing euro-denominated notes due in 2023,” S&P said in a news release.

“Notwithstanding the near-term weakness in credit measures following weaker-than-expected fourth-quarter 2022 financial results and higher debt levels to fund the acquisition, we believe the company has solid prospects to return adjusted debt to EBITDA to 1.5x or lower well within two years, which we believe is commensurate with the A- credit rating,” S&P said in the news release.

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