Moody's rates Tyco Electronics Baa2

Moody's Investors Service said it assigned a Baa2 issuer rating to Tyco Electronics Ltd. pending its separation from Tyco International Ltd., which is expected to take place in the second quarter and is subject to approval by the Securities and Exchange Commission.

The outlook is stable.

Tyco Electronics will include the electrical connector and component businesses of Tyco International as well as certain other businesses such as the undersea cable servicing business. The company is expected to be capitalized with $2.8 billion of debt, a liquidity line and $500 million of cash.

The agency said the Baa2 issuer rating is driven by Tyco Electronics' leading position within the electronic connector and component industries, strong credit metrics, geographic diversification, customer diversification and scale.

The ratings are constrained by the cyclical nature of the connector and component businesses, overhang from the pending lawsuits and tax contingencies, challenges of transitioning to a standalone public company and declining operating margins driven by recent increases of raw material prices, Moody's said.

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