S&P rates Stanley Black & Decker notes A, BBB+

S&P said it assigned its A issue-level rating to Stanley Black & Decker Inc.'s proposed senior unsecured notes and a BBB+ rating to the company's proposed junior subordinated debentures. All of S&P’s other ratings on the company remain unchanged.

Proceeds are expected to be used for general corporate purposes, including funding its recently announced acquisition of Consolidated Aerospace Manufacturing LLC for up to $1.5 billion.

The acquisition of CAM will expand the company's industrial division by adding a new commercial aerospace fasteners market segment to its existing auto fasteners and industrial tools business. “Stanley's adjusted debt leverage exceeds the 1.5x-2x range that we view as consistent with an A issuer credit rating. However, the company's steady free cash flow and transparent capital allocation should enable it to manage its debt load and maintain fully adjusted debt to EBITDA of about 2x as of the end of 2020 barring a sharp deterioration in market conditions,” S&P said in a press release.

Stanley uses various convertible and subordinated instruments in its capital structure. S&P treats the company's junior subordinated debt as 50% equity when calculating its credit ratios.

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