Fitch upgrades Flowserve

Fitch Ratings said it upgraded Flowserve Corp.'s issuer default rating and senior secured bank facilities to BBB- from BB+ and revised the outlook to positive from stable.

The agency said the upgrade reflects improved clarity surrounding Flowserve's financial policies following the company's recent adoption of an updated capital structure strategy. The strategy includes a target range for leverage, defined as gross debt to EBITDA, of 1 times to 2 times. The 0.7 times leverage ratio as of March 31 is lower than most other BB+ peers, the agency said.

At the current BBB- rating, Flowserve's target leverage would still be considered somewhat low, but other considerations constrain the ratings, Fitch said. In the agency's view, these including cyclicality in Flowserve's long-cycle infrastructure markets that can occasionally pressure operating cash flow and concerns about global economic trends.

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