Moody’s downgrades Weir to Baa3

Moody's Investors Service said it downgraded the long-term issuer rating of Weir Group plc to Baa3 from Baa1 and its short-term rating to Prime-3 from Prime-2.

The outlook remains negative.

"Today's rating action reflects our expectations that Weir's credit metrics will remain well below levels commensurate with a Baa1 rating at least through 2017," Martin Fujerik, Moody’s lead analyst for Weir, said in a news release.

Moody's estimates that Weir's Moody's-adjusted debt/EBITDA and Moody's-adjusted EBITA margin will be around 5 times and 8%, respectively, for 2015. If adjusted for around €120 million restructuring charges, the metrics would be around 3.5 times and 13.5%, respectively.

These metrics might weaken further in 2016, and, therefore, a major improvement in credit metrics through 2017 toward levels the agency sets for a Baa1 rating (2 times and 15%, respectively), has become very unlikely.

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