Moody's upgrades IP senior unsecured rating to Baa2 from Baa3, with outlook stable; rating action affects about US$9B of rated debt securities, recognizes expectation of company's improving financial and operating performance, its sustainable deleveraging
Debra Garcia
TORONTO
,
May 28, 2014
(press release)
–
Global Credit Research
Approximately US$9 billion of rated debt securities affected
Moody's Investors Service upgraded International Paper Company ("IP") senior unsecured rating to Baa2 from Baa3. The rating outlook is stable. The rating action recognizes IP's sustained deleveraging and the expectation of improving financial and operating performance.
Upgrades:
..Issuer: Angelina & Neches River Authority, TX
....Senior Unsecured Revenue Bonds May 1, 2015, Upgraded to Baa2 from Baa3
..Issuer: Bradford County Industrial Develop. Auth., PA
....Senior Unsecured Revenue Bonds Dec 1, 2019, Upgraded to Baa2 from Baa3
....Senior Unsecured Revenue Bonds Mar 1, 2019, Upgraded to Baa2 from Baa3
..Issuer: Butler County Industrial Dev. Auth., PA
....Senior Unsecured Revenue Bonds Sep 1, 2032, Upgraded to Baa2 from Baa3
..Issuer: Camden (City of) AR
....Senior Unsecured Revenue Bonds Nov 1, 2018, Upgraded to Baa2 from Baa3
..Issuer: Cass County Industrial Dev. Corp, TX
....Senior Unsecured Revenue Bonds Mar 1, 2027, Upgraded to Baa2 from Baa3
....Senior Unsecured Revenue Bonds Mar 1, 2033, Upgraded to Baa2 from Baa3
....Senior Unsecured Revenue Bonds Mar 1, 2024, Upgraded to Baa2 from Baa3
....Senior Unsecured Revenue Bonds Mar 1, 2025, Upgraded to Baa2 from Baa3
..Issuer: Champion International Corporation
....Senior Unsecured Regular Bond/Debenture Sep 1, 2025, Upgraded to Baa2 from Baa3
....Senior Unsecured Regular Bond/Debenture Feb 15, 2026, Upgraded to Baa2 from Baa3
....Senior Unsecured Regular Bond/Debenture Nov 1, 2026, Upgraded to Baa2 from Baa3
....Senior Unsecured Regular Bond/Debenture Dec 15, 2027, Upgraded to Baa2 from Baa3
....Senior Unsecured Regular Bond/Debenture Nov 1, 2025, Upgraded to Baa2 from Baa3
..Issuer: Columbus (Cnty of) NC, I.F. & P.C.F.A.
....Senior Unsecured Revenue Bonds Nov 1, 2033, Upgraded to Baa2 from Baa3
....Senior Unsecured Revenue Bonds Nov 1, 2033, Upgraded to Baa2 from Baa3
....Senior Unsecured Revenue Bonds May 1, 2034, Upgraded to Baa2 from Baa3
..Issuer: Courtland (Town of) AL, Indus. Devel. Board
....Senior Unsecured Revenue Bonds May 1, 2017, Upgraded to Baa2 from Baa3
....Senior Unsecured Revenue Bonds Aug 1, 2025, Upgraded to Baa2 from Baa3
....Senior Unsecured Revenue Bonds Aug 1, 2029, Upgraded to Baa2 from Baa3
....Senior Unsecured Revenue Bonds Aug 1, 2027, Upgraded to Baa2 from Baa3
....Senior Unsecured Revenue Bonds Nov 1, 2033, Upgraded to Baa2 from Baa3
....Senior Unsecured Revenue Bonds Jun 1, 2025, Upgraded to Baa2 from Baa3
....Senior Unsecured Revenue Bonds May 1, 2022, Upgraded to Baa2 from Baa3
....Senior Unsecured Revenue Bonds Jun 1, 2025, Upgraded to Baa2 from Baa3
....Senior Unsecured Revenue Bonds Jun 1, 2025, Upgraded to Baa2 from Baa3
..Issuer: Crisp (County of) GA, Development Authority
....Senior Unsecured Revenue Bonds Feb 1, 2015, Upgraded to Baa2 from Baa3
..Issuer: De Soto (Parish of) LA
....Senior Unsecured Revenue Bonds, Upgraded to Baa2 from Baa3
....Senior Unsecured Revenue Bonds Nov 1, 2022, Upgraded to Baa2 from Baa3
....Senior Unsecured Revenue Bonds Nov 1, 2018, Upgraded to Baa2 from Baa3
....Senior Unsecured Revenue Bonds Nov 1, 2027, Upgraded to Baa2 from Baa3
....Senior Unsecured Revenue Bonds Nov 1, 2018, Upgraded to Baa2 from Baa3
....Senior Unsecured Revenue Bonds Mar 1, 2019, Upgraded to Baa2 from Baa3
..Issuer: Dickinson County Economic Dev. Corp., MI
....Senior Unsecured Revenue Bonds Nov 1, 2018, Upgraded to Baa2 from Baa3
..Issuer: Erie County Industrial Development Auth., PA
....Senior Unsecured Revenue Bonds Nov 1, 2018, Upgraded to Baa2 from Baa3
..Issuer: Escambia (County of) FL
....Senior Unsecured Revenue Bonds Mar 1, 2033, Upgraded to Baa2 from Baa3
....Senior Unsecured Revenue Bonds Apr 1, 2015, Upgraded to Baa2 from Baa3
....Senior Unsecured Revenue Bonds Nov 1, 2027, Upgraded to Baa2 from Baa3
....Senior Unsecured Revenue Bonds Aug 1, 2026, Upgraded to Baa2 from Baa3
....Senior Unsecured Revenue Bonds Aug 1, 2026, Upgraded to Baa2 from Baa3
....Senior Unsecured Revenue Bonds Nov 1, 2033, Upgraded to Baa2 from Baa3
....Senior Unsecured Revenue Bonds Dec 1, 2030, Upgraded to Baa2 from Baa3
..Issuer: Essex County Industrial Development Agcy, NY
....Senior Unsecured Revenue Bonds Mar 1, 2027, Upgraded to Baa2 from Baa3
....Senior Unsecured Revenue Bonds Sep 1, 2032, Upgraded to Baa2 from Baa3
....Senior Unsecured Revenue Bonds Jul 1, 2016, Upgraded to Baa2 from Baa3
....Senior Unsecured Revenue Bonds Dec 1, 2023, Upgraded to Baa2 from Baa3
....Senior Unsecured Revenue Bonds Apr 1, 2021, Upgraded to Baa2 from Baa3
..Issuer: Georgetown (County of) SC
....Senior Unsecured Revenue Bonds Dec 1, 2029, Upgraded to Baa2 from Baa3
....Senior Unsecured Revenue Bonds Aug 1, 2030, Upgraded to Baa2 from Baa3
..Issuer: Haywood (Cnty of) NC, I.F. & P.C.F.A.
....Senior Unsecured Revenue Bonds Mar 1, 2024, Upgraded to Baa2 from Baa3
..Issuer: International Paper Company
....Senior Unsecured Medium-Term Note Program, Upgraded to (P)Baa2 from (P)Baa3
....Senior Unsecured Regular Bond/Debenture Apr 1, 2015, Upgraded to Baa2 from Baa3
....Senior Unsecured Regular Bond/Debenture May 15, 2019, Upgraded to Baa2 from Baa3
....Senior Unsecured Regular Bond/Debenture Apr 1, 2016, Upgraded to Baa2 from Baa3
....Senior Unsecured Regular Bond/Debenture Nov 15, 2039, Upgraded to Baa2 from Baa3
....Senior Unsecured Regular Bond/Debenture Feb 15, 2022, Upgraded to Baa2 from Baa3
....Senior Unsecured Regular Bond/Debenture Nov 15, 2041, Upgraded to Baa2 from Baa3
....Senior Unsecured Regular Bond/Debenture Nov 1, 2023, Upgraded to Baa2 from Baa3
....Senior Unsecured Regular Bond/Debenture Apr 15, 2029, Upgraded to Baa2 from Baa3
....Senior Unsecured Regular Bond/Debenture Jun 15, 2018, Upgraded to Baa2 from Baa3
....Senior Unsecured Regular Bond/Debenture Jun 15, 2038, Upgraded to Baa2 from Baa3
....Senior Unsecured Regular Bond/Debenture Aug 15, 2021, Upgraded to Baa2 from Baa3
..Issuer: Isle of Wight Cnty Ind. Dev. Auth., VA
....Senior Unsecured Revenue Bonds Mar 1, 2031, Upgraded to Baa2 from Baa3
....Senior Unsecured Revenue Bonds Nov 1, 2027, Upgraded to Baa2 from Baa3
..Issuer: Jay (Town of) ME
....Senior Unsecured Revenue Bonds Nov 1, 2017, Upgraded to Baa2 from Baa3
....Senior Unsecured Revenue Bonds May 1, 2019, Upgraded to Baa2 from Baa3
..Issuer: Jones (County of) MS
....Senior Unsecured Revenue Bonds Oct 1, 2021, Upgraded to Baa2 from Baa3
..Issuer: Kaukauna (City of) WI
....Senior Unsecured Revenue Bonds Jun 1, 2029, Upgraded to Baa2 from Baa3
..Issuer: Pine Bluff (City of) AR
....Senior Unsecured Revenue Bonds Nov 15, 2015, Upgraded to Baa2 from Baa3
..Issuer: Pratville Industrial Dev Board, AL
....Senior Unsecured Revenue Bonds, Upgraded to Baa2 from Baa3
....Senior Unsecured Revenue Bonds Dec 1, 2030, Upgraded to Baa2 from Baa3
....Senior Unsecured Revenue Bonds Nov 1, 2033, Upgraded to Baa2 from Baa3
....Senior Unsecured Revenue Bonds Mar 1, 2033, Upgraded to Baa2 from Baa3
....Senior Unsecured Revenue Bonds Nov 1, 2033, Upgraded to Baa2 from Baa3
..Issuer: Rapides (Parish of) Louisiana
....Senior Unsecured Revenue Bonds Mar 1, 2027, Upgraded to Baa2 from Baa3
..Issuer: Richland (County of) SC
....Senior Unsecured Revenue Bonds Apr 1, 2023, Upgraded to Baa2 from Baa3
..Issuer: Richmond County Development Authority, GA
....Senior Unsecured Revenue Bonds Dec 1, 2020, Upgraded to Baa2 from Baa3
....Senior Unsecured Revenue Bonds Feb 1, 2025, Upgraded to Baa2 from Baa3
....Senior Unsecured Revenue Bonds Aug 1, 2030, Upgraded to Baa2 from Baa3
....Senior Unsecured Revenue Bonds Nov 1, 2033, Upgraded to Baa2 from Baa3
....Senior Unsecured Revenue Bonds Nov 1, 2033, Upgraded to Baa2 from Baa3
....Senior Unsecured Revenue Bonds Mar 1, 2015, Upgraded to Baa2 from Baa3
....Senior Unsecured Revenue Bonds Feb 1, 2025, Upgraded to Baa2 from Baa3
....Senior Unsecured Revenue Bonds Nov 15, 2025, Upgraded to Baa2 from Baa3
....Senior Unsecured Revenue Bonds Nov 1, 2027, Upgraded to Baa2 from Baa3
..Issuer: Sabine (County of) LA, River Authority
....Senior Unsecured Revenue Bonds Feb 1, 2025, Upgraded to Baa2 from Baa3
..Issuer: Savannah Economic Development Authority, GA
....Senior Unsecured Revenue Bonds May 1, 2021, Upgraded to Baa2 from Baa3
....Senior Unsecured Revenue Bonds Mar 1, 2017, Upgraded to Baa2 from Baa3
....Senior Unsecured Revenue Bonds Nov 1, 2033, Upgraded to Baa2 from Baa3
....Senior Unsecured Revenue Bonds Aug 1, 2014, Upgraded to Baa2 from Baa3
..Issuer: Selma (City of) AL, Industrial Devel. Board
....Senior Unsecured Revenue Bonds Dec 1, 2030, Upgraded to Baa2 from Baa3
....Senior Unsecured Revenue Bonds Nov 1, 2034, Upgraded to Baa2 from Baa3
....Senior Unsecured Revenue Bonds Dec 1, 2035, Upgraded to Baa2 from Baa3
....Senior Unsecured Revenue Bonds May 1, 2034, Upgraded to Baa2 from Baa3
....Senior Unsecured Revenue Bonds Jun 1, 2015, Upgraded to Baa2 from Baa3
..Issuer: Temple-Inland Inc.
....Senior Unsecured Regular Bond/Debenture Jan 15, 2016, Upgraded to Baa2 from Baa3
....Senior Unsecured Regular Bond/Debenture Jan 15, 2018, Upgraded to Baa2 from Baa3
..Issuer: Warren (County of) MS
....Senior Unsecured Revenue Bonds Nov 1, 2034, Upgraded to Baa2 from Baa3
....Senior Unsecured Revenue Bonds Sep 1, 2031, Upgraded to Baa2 from Baa3
....Senior Unsecured Revenue Bonds Mar 1, 2015, Upgraded to Baa2 from Baa3
....Senior Unsecured Revenue Bonds Mar 1, 2019, Upgraded to Baa2 from Baa3
....Senior Unsecured Revenue Bonds Sep 1, 2032, Upgraded to Baa2 from Baa3
....Senior Unsecured Revenue Bonds Nov 1, 2027, Upgraded to Baa2 from Baa3
....Senior Unsecured Revenue Bonds Dec 1, 2035, Upgraded to Baa2 from Baa3
....Senior Unsecured Revenue Bonds Aug 1, 2030, Upgraded to Baa2 from Baa3
....Senior Unsecured Revenue Bonds May 1, 2034, Upgraded to Baa2 from Baa3
Outlook Actions:
..Issuer: Champion International Corporation
....Outlook, Remains Stable
..Issuer: International Paper Company
....Outlook, Remains Stable
..Issuer: Temple-Inland Inc.
....Outlook, Remains Stable
RATINGS RATIONALE
IP's Baa2 senior unsecured rating reflects the company's scale and leading market share in paper packaging, uncoated freesheet and market pulp, good geographic diversification, and low cost vertically integrated operations with a global supply chain and distribution system. Management has a track record of levering up for acquisitions but then bringing leverage back down within the expected range for its rating relatively quickly. Adjusted debt/EBITDA is now down below 3x, and Moody's expects it to improve modestly going forward as the company balances increasing shareholder payments with a capital structure that supports an Investment Grade rating. IP's rating is tempered by the secular decline of communication papers in developed markets like the US and the cyclicality of the market pulp business.
The stable outlook reflects Moody's expectation that IP's strong global operating platform will allow the company to generate strong free cash flow and continue to at least maintain or modestly further improve its credit metrics. Moody's anticipates that the company will not significantly pressure its balance sheet or liquidity position with either debt-financed acquisitions or shareholder distributions.
The company's Baa2 senior unsecured rating might be upgraded if adjusted debt/EBITDA approaches 2x and RCF/adjusted debt approaches 26% on a sustained basis. The rating might be downgraded with a significant deterioration in operating performance, or if changes in IP's financial management policies were to materially pressure its balance sheet or liquidity position. A downgrade could occur if adjusted debt/EBITDA approaches 3x or RCF/adjusted debt approaches 20% on a sustained basis.
The principal methodology used in this rating was Global Paper and Forest Products Industry published in October 2013. Please see the Credit Policy page on www.moodys.com for a copy of this methodology.
Headquartered in Memphis, Tennessee, IP is the largest global producer of packaging products and uncoated freesheet paper. Proforma for the announced divestiture of its distribution business (xpedx), IP has annual revenues of about $23 billion.
REGULATORY DISCLOSURES
For ratings issued on a program, series or category/class of debt, this announcement provides certain regulatory disclosures in relation to each rating of a subsequently issued bond or note of the same series or category/class of debt or pursuant to a program for which the ratings are derived exclusively from existing ratings in accordance with Moody's rating practices. For ratings issued on a support provider, this announcement provides certain regulatory disclosures in relation to the rating action on the support provider and in relation to each particular rating action for securities that derive their credit ratings from the support provider's credit rating. For provisional ratings, this announcement provides certain regulatory disclosures in relation to the provisional rating assigned, and in relation to a definitive rating that may be assigned subsequent to the final issuance of the debt, in each case where the transaction structure and terms have not changed prior to the assignment of the definitive rating in a manner that would have affected the rating. For further information please see the ratings tab on the issuer/entity page for the respective issuer on www.moodys.com.
For any affected securities or rated entities receiving direct credit support from the primary entity(ies) of this rating action, and whose ratings may change as a result of this rating action, the associated regulatory disclosures will be those of the guarantor entity. Exceptions to this approach exist for the following disclosures, if applicable to jurisdiction: Ancillary Services, Disclosure to rated entity, Disclosure from rated entity.
The rating has been disclosed to the rated entity or its designated agent(s) and issued with no amendment resulting from that disclosure.
Moody's has not provided advisory services but may have provided Ancillary or Other Permissible Service(s) to the rated entity, its related third parties and/or the party that requested the rating within the past two years (including during the most recently ended fiscal year). Please see the special report "Ancillary or other permissible services provided to entities rated by MIS's credit rating agency in Canada" on the ratings disclosure page www.moodys.com/disclosures on our website for further information.
Regulatory disclosures contained in this press release apply to the credit rating and, if applicable, the related rating outlook or rating review.
Please see www.moodys.com for any updates on changes to the lead rating analyst and to the Moody's legal entity that has issued the rating.
Please see the ratings tab on the issuer/entity page on www.moodys.com for additional regulatory disclosures for each credit rating.
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