Moody's cuts Pentair, rates notes Baa3

Moody's Investors Service said it assigned a Baa3 rating to Pentair, Inc.'s new $400 million senior unsecured debt issue and lowered the company's senior unsecured issuer rating to Ba1 from Baa3.

The downgrade reflects the increase in contractual subordination caused by the issuance of a material amount of new debt at Pentair, which benefits from upstream subsidiary guarantees.

The proceeds, together with incremental drawings under its new $700 million senior unsecured bank facility, will be used to finance the $700 million acquisition of Clean Process Technologies from Norit Holding, BV, Moody's said.

The outlook was revised to stable.

This concludes a review that began in April, the agency said.

The ratings capture the company's strong market positions in both its water and technical products groups, which benefit from global footprints, several leading brands and good exposure to recurring replacement revenues, Moody's said.

While Pentair's end markets are cyclical and the acquisition will initially stretch key credit metrics for the rating, Clean Process Technologies will modestly enhance Pentair's business profile, the agency said.

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