Moody's Raises Boise Cascade's (BCC) CFR to 'Ba3'

Moody's Investors Service upgraded Boise Cascade Company's (NYSE: BCC) (Boise Cascade) corporate family rating (CFR) to Ba3 from B1, probability of default rating (PDR) to Ba3-PD from B1-PD, senior unsecured bond rating to B1 from B2 and speculative grade liquidity rating to SGL-1 from SGL-2. The rating outlook is stable. "The upgrade reflects a sustained improvement in the company's financial and operational performance and our expectation of continued strong financial performance, despite slower than expected improvement in the US housing market", said Ed Sustar, Moody's lead analyst for Boise Cascade.

Upgrades:

..Issuer: Boise Cascade Company

.... Probability of Default Rating, Upgraded to Ba3-PD from B1-PD

.... Speculative Grade Liquidity Rating, Upgraded to SGL-1 from SGL-2

.... Corporate Family Rating, Upgraded to Ba3 from B1

....Senior Unsecured Regular Bond/Debenture Nov 1, 2020, Upgraded to B1 (LGD5) from B2 (LGD5)

Outlook Actions:

..Issuer: Boise Cascade Company

....Outlook, Remains Stable

RATINGS RATIONALE

Boise Cascade's Ba3 corporate family rating reflects the company's strong liquidity and expectations that the company will be able to maintain strong credit protection metrics with a slow recovery in the North American wood-based building products market. The rating also reflects the company's vertical integration and strong market position as a building material distributor and wood products producer in North America. Credit challenges include the lack of diversification away from the wood-based building products market, the inherent volatility of the wood products industry, along with the uncertain pace of the US housing recovery.

The SGL-1 speculative grade liquidity rating reflects the company's strong liquidity position, supported by $130 million of cash (June 2014), undrawn $350 million asset based revolving credit facility (unrated; matures in July 2018, with about $8 million of outstanding letters of credit as of June 2014) and Moody's projected cash generation of about $40 million over the next four quarters. Most of the company's fixed assets are unencumbered and we expect the company will remain in compliance with its debt covenants.

The stable outlook reflects our expectation that Boise Cascade will continue to generate strong operating performance over the next 12-18 months. The company will benefit from the full integration of the Carolina plywood mills and stronger than average plywood prices. This is tempered by Moody's uncertainty regarding the level of new home building activity and pace of idled industry wood products capacity being restarted. An upgrade would depend on a sustained improvement in the company's financial performance. Quantitatively, this could result if normalized financial leverage remains below 3.5 times and interest coverage exceeds 3.5 times. The company could face a potential pullback in wood product prices and earnings if industry supply returns faster than demand. The rating could be lowered if the company's liquidity deteriorates significantly or if normalized financial leverage exceeds 4.5 times and interest coverage remains below 2.5 times for a sustained period of time.

The principal methodology used in this rating was the Global Paper and Forest Products Industry Methodology published in October 2013. Other methodologies used include Loss Given Default for Speculative-Grade Non-Financial Companies in the U.S., Canada and EMEA published in June 2009. Please see the Credit Policy page on www.moodys.com for a copy of these methodologies.

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