Moody's lowers ABB view to negative

Moody's Investors Service said it changed the outlook on the A2 long-term issuer rating of ABB Ltd. to negative from stable.

The agency also said it affirmed ABB's A2 long-term issuer rating, the P-1 short-term issuer rating and the A2-rated debt instruments.

The outlook revision reflects the impact of the disposal of 80.1% of the company's Power Grid business to Hitachi, Ltd., in particular ABB's intention to pay-out the proceeds to the shareholders, Moody's explained.

The negative outlook especially reflects that the nature of this transaction indicates ABB's shift toward a more shareholder-oriented financial policy, the agency said.

ABB announced that it intends to distribute the entire net cash proceeds from this transaction, which is up to $7.8 billion, to its shareholders through share buyback or similar mechanism, Moody's noted.

Through this transaction, ABB will lose a substantial part of its revenues and earnings without benefiting from an adequate de-leveraging, as proceeds are intended to be paid out entirely to shareholders, the agency said.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.