Fitch lifts Royal Philips view to stable

Fitch Ratings said it revised the outlook on Royal Philips NV to stable from negative.

The agency also said it affirmed the company's long-term issuer default rating and senior unsecured ratings at A-.

The outlook revision follows the completion of Philips Lighting’s initial public offering, Fitch said.

The proceeds were used to repay debt, which brings the company’s leverage back in line with sensitivities for the current rating, the agency said.

The stable outlook also considers the improvement in the company’s leverage metrics following the successful initial public offering of 28.75% of its lighting business in the second quarter of 2016, Fitch said.

The IPO proceeds were used to repay debt, specifically the bridge loan for the Volcano acquisition, the agency said.

The spin-off of the lighting business will reduce diversification, but Fitch said it believes that exiting this mature, low margin business will be a positive long-term credit driver.

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