OREANDA-NEWS. S&P Global Ratings today assigned its 'BB-' issue-level rating to Middleton, Wis.-based Spectrum Brands Inc.'s proposed €375 million senior unsecured notes due 2026. We expect proceeds from the leverage neutral transaction, which includes the proposed notes and about $100 million of cash and borrowings under the company's revolving credit facility, will be used to satisfy the cash tender offer announced today for the $520 million 6.375% senior unsecured notes due 2020. The recovery rating on the proposed notes is '4', indicating that creditors could expect average (30% to 50%, in the lower half of the range) recovery in the event of a payment default. The proposed notes will be guaranteed on a senior unsecured basis by Spectrum Brands' domestic subsidiaries and its immediate parent holding company (SB/RH Holdings LLC). Our ratings assume the transaction closes substantially on the terms provided to us. Debt outstanding pro forma for the proposed transaction is about $4 billion.

All of our existing ratings on the company, including our 'BB-' corporate credit rating, are unchanged. The outlook is stable.

Our ratings on Spectrum Brands incorporate the company's good product diversity, its modest scale, operating leverage, and profitability; and its position as a provider of lower-priced products, which possess less pricing power than premium priced competition; however, they tend to perform relatively well in sluggish economic environments. Our ratings also recognize the company's participation in highly competitive, low-growth product categories and its susceptibility to input cost volatility, moderate currency volatility, and some seasonality. The company's home and garden and auto care businesses are susceptible to the effects of extreme weather conditions.

For the complete corporate credit rational, please see the research update on Spectrum Brands Inc. published June 24, 2016 on Global Credit Portal.