S&P applies A- to Magna notes

Standard & Poor's said it assigned its A- issue-level rating to Magna International Inc.'s proposed €550 million senior unsecured notes.

Magna intends to use net proceeds for general corporate purposes, including capital expenditures and the acquisition of the Getrag Group of Cos.

All existing ratings on the company, including the A- long-term corporate credit rating, are unchanged.

The outlook is stable.

S&P said the ratings reflect Magna’s proven competitive position as a major supplier of advanced automotive systems, assemblies, modules and components to original equipment manufacturers of cars and light trucks in the global market and the expectation that Magna will continue to pursue relatively conservative financial policies while balancing shareholder returns, and maintain a minimal financial risk profile as per the criteria.

With Magna's planned acquisition of Getrag, which it will fund with a mix of cash and debt, the agency expects leverage to increase to about 1.1 times. This remains in line with the expectation that the company can sustain adjusted debt leverage at or below 1.5 times for the current rating.

In addition, S&P believes Magna has significant financial flexibility to maintain its leverage to its indicated target through its share repurchase program, which it can scale back if necessary.

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