Moody’s downgrades SKF

Moody’s Investors Service said it downgraded SKF AB’s senior unsecured ratings to Baa2 from Baa1.

Moody’s said it changed the outlook to stable from negative.

The agency said it expects that in a low growth environment it will take SKF longer than 12 to18 months to improve its capital structure to be commensurate with Baa1 ratings.

The agency said it estimates that SKF’s debt-to-EBITDA ratio will be roughly 3.5x in 2015.

SKF has operated with heightened leverage since late 2013 when the company completed the largely debt-financed acquisition of Kaydon Corp. for $1.15 billion, Moody’s said.

The agency also said it recognizes SKF’s efforts to sell its non-core assets to strengthen its capital structure.

The ratings are supported by SKF’s good free cash flow generation throughout the cycle and strong liquidity profile, Moody’s said.

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