Moody’s downgrades Caterpillar to A3

Moody's Investors Service said it downgraded the long- and short-term ratings of Caterpillar, Inc., Caterpillar Financial Services Corp. and various supported affiliates to A3 from A2 and to Prime-2 from Prime-1.

The outlook is stable.

Moody’s said the downgrade to A3 reflects its view that Caterpillar has been challenged, and is expected to remain challenged, with relatively low returns, particularly with respect to EBITA margins and returns on assets throughout all phases of the business cycle.

Caterpillar performs well, but not at superior levels during strong markets, and the company underperforms meaningfully during market troughs, the agency explained.

The expected performance and the volatility in the results reflect a higher risk profile than that which is generally characteristic of other companies rated at the A2 level.

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