Moody's lowers ITT

Moody's Investors Service said it lowered the rating for certain senior unsecured debt of ITT Corp. to Baa3 from Baa2 and ITT's short-term rating to prime-3 from prime-2.

The actions conclude a review for possible downgrade that began in January 2011 following news of ITT's plans to separate into three public entities, Moody's said.

The review was continued in September when $1.85 billion of debt was raised at then wholly-owned subsidiaries, Xylem Inc. and Exelis Inc., the agency said, and at which time ITT's long-term rating was lowered to Baa2 from Baa1

A substantial portion of the proceeds from those offerings and a subsequent borrowing by Exelis will be distributed as a dividend to ITT and which, in combination with existing cash resources, will be used to retire nearly all of existing ITT's indebtedness, Moody's said.

The rating on ITT's notes due in 2025 also was confirmed at Baa2 with a developing outlook while terms of the defeasance of the balance of the notes not tendered in a recent transaction are assessed, the agency said.

The ratings consider its moderate scale, diverse end-markets, initial absence of material levels of funded debt and a strong liquidity profile, Moody's said.

Revenues are balanced across major geographic regions with the majority earned outside of North America, the agency said.

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