Moody's rates Tyco Baa1

Moody's Investors Service said it assigned a Baa1 issuer rating to Tyco International Ltd. pending its successful spinoff of Covidien Ltd. and Tyco Electronics Ltd.

The outlook for the post-separation Tyco is stable.

The separation is expected to be completed by the end of the second quarter. Tyco will be an $18.6 billion diversified conglomerate comprised of Tyco's fire and security businesses and the engineered products and services businesses and is expected to be capitalized with $4 billion of debt and $1 billion of cash, with additional liquidity provided through access to a revolving credit facility.

The agency said the Baa1 issuer rating reflects Tyco's leading market position, particularly within the ADT security businesses; its global presence and scale resulting from the variety of products offered by its six operating segments; and its low balance sheet leverage and solid free cash flow generation.

However, the rating is constrained by the overhang from the pending lawsuits and tax liabilities and the high level of competition from financially strong, global peers that apply constant pressure to its market share and margins, Moody's said.

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