S&P rates Rockwell notes A

S&P said it assigned Rockwell Automation Inc.’s planned offering of $1.5 billion of bonds in three tranches A ratings.

Rockwell plans to use the proceeds and about $300 million in cash and commercial paper to finance its acquisition of Plex Systems.

“We estimate that this could cause its leverage to remain above the 2x level we consider appropriate for the current rating for the 18-24 months following the close of the transaction, but we believe Rockwell has the ability to reduce debt leverage after this transaction from strong free cash flow generation and disciplined capital allocation,” S&P said in a press release.

The agency affirmed all the company’s ratings, including the A issuer rating, and removed them from CreditWatch, where it placed them with negative implications on June 25.

The outlook is negative, reflecting the possibility of a ratings downgrade if Rockwell cannot reduce its debt to EBITDA below 2x by the end of fiscal 2023, S&P said.

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