MeadWestvaco Debt Draws Diverse Credit Ratings

NEW YORK (AP) — Ratings agencies split Monday over how to evaluate $250 million note in notes from MeadWestvaco Corp., which makes paper and plastic products, with one agency giving it an investment-grade rating and another labeling it "junk."

The Richmond, Va., company said Monday it will offer $250 million in notes due 2019 in a public offering. Proceeds will be used for a tender offer of up to $250 million in 6.85 percent notes due 2012 and for general corporate purposes.

Standard & Poor's Ratings Services responded by assigning it a "BBB" senior unsecured debt rating, its second lowest investment-grade rating.

"The ratings ... reflect the company's diversified product portfolio, leading market position in bleached paperboard, competitive level of forward integration, good geographic diversity, and meaningful timberlands ownership," said Standard & Poor's credit analyst Pamela Rice.

Moody's Investors Service assigned the offering a "Ba1" rating, its highest non-investment grade, or "junk," rating.

The agency said its rating reflects "the impacts of a highly competitive market, a challenging economic environment and volatile input costs that may constrain projected margin expansion and free cash flow generation. Credit challenges also include the company's tendency to pay a large dividend."

In afternoon trading shares fell, along with the broader market, 73 cents, or 3.4 percent, to $20.63.