Jan 9 - Standard & Poor's Ratings Services today assigned its 'CCC+' unsecured debt rating to HD Supply Inc.'s proposed offering of $650 million senior subordinated notes due 2021. The recovery rating on the notes is '6', indicating our expectation of negligible (0% to 10%) recovery in the event of a payment default. The 'B' corporate credit rating and stable outlook on Atlanta-based HD Supply are unaffected. We expect the industrial distribution company to use proceeds to pay down balances outstanding on its existing subordinated debt due 2015. By reducing balances on its existing subordinated debt, HD Supply will no longer be subject to springing maturity on other debt issues. Pro forma for the proposed transaction, we expect credit measures to remain unchanged. The ratings on privately owned HD Supply reflect the company's "satisfactory" business risk profile as a major industrial distributor of infrastructure and energy, maintenance, repair and improvement, and specialty construction products. The rating also reflects the company's "highly leveraged" financial risk profile and the impact on its operating performance arising from the protracted weakness in U.S. construction activity. However, the company's business-line diversity, leading market positions, and operational scale to weather the construction downturn partly offset these factors. Although Standard & Poor's remains cautious about the potential recovery in the construction cycle, HD Supply continues to expand its share of sales in the maintenance, repair, and operations and infrastructure markets and reduce the effect of the weak construction markets on its near- to intermediate-term operating performance. Its capital structure has about $6 billion of funded debt. RELATED CRITERIA AND RESEARCH -- HD Supply Inc., Oct. 17, 2012 -- Business Risk/Financial Risk Matrix Expanded, Sept. 18, 2012 -- 2008 Corporate Criteria: Analytical Methodology, April 15, 2008 RATINGS LIST HD Supply Inc. Corporate Credit Rating B/Stable/-- New Ratings HD Supply Inc. $650 mil sub. notes due 2021 CCC+ Recovery Rating 6 Complete ratings information is available to subscribers of RatingsDirect on the Global Credit Portal at www.globalcreditportal.com. All ratings affected by this rating action can be found on Standard & Poor's public Web site at www.standardandpoors.com. Use the Ratings search box located in the left column.