Moody's reviews, may cut ADT

Moody's Investors Service said it placed all ratings of ADT Corp. under review for downgrade following the July 31 announcement that ADT plans to raise its target leverage ratio to 3x debt/EBITDA from 2x debt/EBITDA.

The review could result in a multi-notch downgrade of ADT's Baa2 senior unsecured rating to below investment grade (within the Ba category).

ADT plans to use proceeds from incremental debt for internal investments, acquisitions and returning cash to shareholders in the form of both dividends and share buybacks.

"Moody's review will consider the credibility of ADT's board and management team and the possibility that financial policies may change yet again to the detriment of bond holders," Moody's analyst Suzanne Wingo said in a news release.

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