S&P gives BB to Paprec notes

S&P said it assigned a BB issue rating to Paprec Holding's upcoming offering of €600 million of senior secured notes, split into one tranche maturing in 2027 and one tranche in 2029. The recovery rating on the notes is 3, indicating meaningful recovery (50%-70%; rounded estimate: 55%) in default.

“The proposed notes will rank at the same level of seniority as the existing €422 million senior secured notes due July 2028. The transaction does not affect any of our other ratings on Paprec, but it will increase Paprec's interest burden. However, we continue to forecast that Paprec's leverage will increase only moderately in 2023, to 3.7x, in a difficult macroeconomic context that is pressurizing its margins, before declining to about 3.0x in 2024. We also expect that Paprec will sustain its funds from operations to debt above 20%,” S&P said in a press release.

The issuer plans to use the proceeds to refinance €575 million of senior secured notes due March 2025 and for general corporate purposes. As part of the transaction, Paprec will extend the maturity of the €300 million super senior secured revolving credit facility to the earliest of April 2028 or three months before the earliest maturity of the two tranches of new senior secured notes.

The outlook is stable.

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