Moody's ups Mohawk Industries

Moody's Investors Service said it upgraded the ratings Mohawk Industries, Inc.'s senior unsecured notes to Ba1 (LGD 4, 62%) from Ba2 (LGD 5, 83%) because the security and guarantee provisions of the company's credit facility were recently removed.

The upgraded notes include the company's $400 million 7.2% senior unsecured notes due April 15, 2012 and its $900 million 6.125% senior unsecured notes due 2016.

The company's Ba1 corporate family rating was affirmed, along with its probability of default rating at Ba1 and speculative grade liquidity rating at SGL-1.

The outlook remains positive.

The security and guarantee provisions of the credit facility were eliminated when Mohawk was upgraded to investment grade by another rating agency earlier this month, said Kevin Cassidy, a Moody's analyst.

As a result, the notes are no longer effectively subordinated to the credit facility, improving their relative strength within the capital structure, the agency said.

The ratings reflect Mohawk's leading market share in floor covering, strong cash flow and its generally conservative financial policies, Moody's said.

The ratings are constrained by uncertain U.S. housing market trends and by the reluctance of consumers to pay higher prices, especially when gas prices are increasing rapidly, the agency said.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.