Moody's says Valspar notes, issuer rating Baa2

Moody's Investors Service said it assigned a Baa2 rating to the Valspar Corp.'s proposed $300 million 10-year senior notes and affirmed its existing Baa2 senior unsecured rating and Prime-2 commercial paper rating.

The outlook is stable.

Moody's said Valspar's Baa2 long-term rating is supported by its solid market positions, sufficient size to compete in a consolidating industry, operational and geographic diversity, the less volatile nature of the paints and coating business versus other cyclical chemicals, steady cash flow, history of steadily repaying debt from acquisitions, excellent liquidity and credit metrics supportive of the rating.

The ratings recognize the company's track record of maintaining margins while producing steady cash flows, the agency said. The exposure to cyclical businesses, the commodity nature of many of the firm's products, and the volatile nature of certain raw materials that make up about 80% of the cost of goods sold are limiting factors for the business profile.

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