Moody's rates Arrow notes Baa3

Moody's Investors Service said it assigned a Baa3 rating to Arrow Electronics, Inc.'s new $250 million senior notes due 2020. The outlook is stable.

Proceeds from the new issue will be used to purchase the outstanding $200 million 9.15% senior notes maturing October 2010 via a tender offer.

The Baa3 rating incorporates Moody's view that as one of the leading global value-added distributors of electronic components and information technology products, Arrow's significant scale and flexible operating model facilitate solid free cash flow generation in both up and down cycles, which has led to its strong internal liquidity.

At the same time, the Baa3 rating considers the downward pressure on gross margins due to the mix shift to lower margin products, Arrow's increasing exposure to the Asia-Pacific region and recent competitive pricing pressures, the agency said.

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