S&P rates Constellation Brands notes BBB-

S&P said it assigned its BBB- issue-level rating to Constellation Brands Inc.'s proposed senior unsecured notes (the actual amounts and maturity dates will be finalized at the transaction's closing).

The company expects to use net proceeds for general corporate purposes.

Constellation has both secured and unsecured debt in its capital structure, including certain European term loan obligations that benefit from lending directly to the company's international subsidiaries.

Nevertheless, S&P said, all of Constellation's debt is rated BBB- despite the company's European term loans benefiting from a 100% stock pledge of its Mexican operating subsidiaries that own its beer manufacturing assets and from a priority claim to most of its brands.

The European term loan lenders have a priority claim on the brands because they lend directly to CIH International Sarl and CIH Holdings Sarl (the owners of most of Constellation's brands, including the Modelo brands), the agency explained.

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