Moody's cuts ADT notes to junk

Moody's Investors Service said it downgraded the ratings on ADT Corp.'s senior unsecured notes to Ba2 from Baa2.

Concurrently, a Ba2 corporate family rating and a Ba2-PD probability of default rating was assigned.

The Prime-2 short-term commercial paper rating was withdrawn and a speculative grade liquidity rating of SGL-1 was assigned.

The outlook is stable.

This concludes the review for downgrade initiated on July 31 following ADT's announcement that it intends to raise target leverage to 3x debt/EBITDA over time.

Moody's said the downgrade in ADT's senior unsecured notes rating to Ba2 and assignment of a Ba2 corporate family rating reflects not only rising financial leverage, but an unusual fluidity in financial policies. ADT's latest leverage target represents the third financial policy within the past year and the second public increase in target leverage since the spin-off from Tyco in September 2012.

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