Moody’s affirms Acuity Brands

Moody's Investors Service said it affirmed Acuity Brands Lighting, Inc.'s senior unsecured rating at Baa1 upon the company's refinancing transaction.

The outlook remains stable.

Acuity completed the refinancing of its $250 million unsecured revolver expiring in August 2019 with a new $400 million unsecured revolving credit facility due 2023 (unrated).

The company also put in place a new $400 million senior unsecured term loan A due 2023 (unrated) with a delayed-draw provision, allowing it to borrow under the facility in up to four installments over the next 12 months.

The proceeds from the new credit facilities are expected to be used mainly for opportunistic share repurchases, with possible other uses of acquisition funding and debt repayment.

The transaction is credit negative given the anticipated increases in funded debt levels and higher financial leverage, Moody’s said.

However, the affirmation with a stable outlook reflects the conservative approach to financial policies and leverage Acuity has maintained over the years, and Moody's expectations that the company will pursue share repurchases in a disciplined manner such that leverage increases would be modest and temporary, the agency said.

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