Moody's affirms Illinois Tool Works

Moody's Investors Service said it affirmed Illinois Tool Works Inc.'s senior unsecured rating of A1 and assigned an A1 rating to company's $1.0 billion of notes to be offered under rule 144A.

The agency affirmed the company's short-term rating of Prime-1 and the A1 ratings on existing obligations of ITW subsidiaries.

The outlook is stable.

Proceeds will be used to repay a like amount of commercial paper outstanding.

The A1 long-term rating reflects the company's broad product portfolio, aggregate size and geographical mix as well as its track record of strong profit, interest coverage and cash flow generation, the agency said.

Several of the company's end-markets remain cyclical including exposure to construction, heavy equipment manufacturing, automotive and consumer durables, the agency noted.

Ratings also incorporate moderate financial leverage, which has increased as share repurchases and acquisitions have outpaced free cash flow, Moody' said.

A debt-to-EBITDA ratio consistently below 1.5 times could lead to a positive outlook or stronger ratings, the agency said.

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