Moody's rates Rexel notes Ba3

Moody's Investors Service said it assigned a provisional Ba3 rating to Rexel SA's proposed dual-tranche senior notes due June 2020. The company is also putting in place a new revolving credit facility due 2018. The outlook on all Rexel's ratings is negative.

The agency understands that the proceeds of the new notes will be used to redeem the 8¼% senior notes due 2016 and for general corporate purposes.

Although Rexel's Ba2 corporate family rating incorporates the positive steps taken by Rexel to improve its margins, it is currently constrained by the company's weak credit metrics and the uncertainty about the pace at which those credit metrics might improve given the global macroeconomic uncertainties prevailing, the late-cycle nature of the industry in which Rexel operates and the potential for shareholder-friendly financial policies, Moody's said.

More positively, Rexel's Ba2 corporate family rating remains supported by the company's large scale, its strong market positions and its solid liquidity profile, the agency said.

Moody's said the negative outlook reflects Rexel's weaker-than-expected credit metrics as of December and some uncertainty as to the level of future free cash flow generation.

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