Moody's changes Anixter view to negative, rates notes Ba3

Moody's Investors Service said it changed Anixter Inc.'s outlook to negative, concluding the review that began on July 16, and assigned a Ba3 (LGD5) rating to its $350 million senior notes due 2023. The agency also confirmed the company’s corporate family rating at Ba2, probability of default rating at Ba2-PD, existing senior notes at Ba3 (LGD5) and speculative grade liquidity rating at SGL-2.

The rating actions follow the company's announcement that it will acquire HD Supply's power solutions division for about $825 million.

The agency said the negative outlook reflects increased vulnerability to credit deterioration due to integration risks and elevated financial leverage. Increased borrowings used to finance the acquisition will increase its debt-to-EBITDA ratio above Moody's stated downgrade trigger of 3.5x at close.

The Ba2 corporate family rating is supported by Anixter's large scale, healthy cash flow available to reduce debt and its commitment to reduce financial leverage, Moody’s said. Its product, geographic and customer diversity also support the rating.

The rating is constrained by the company's low margins, low organic growth and elevated financial leverage, the agency added.

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