Moody's rates Air Products bonds A2

Moody's Investors Service said it assigned an A2 rating to Air Products & Chemicals, Inc.'s proposed €300 million of senior eurobonds due 2015. The outlook is stable.

Proceeds will be used for general corporate purposes, which may include repayment of commercial paper and the outstanding €300 million 3.875% eurobond that matures on March 10, 2015.

"Despite our stable outlook, Air Products continues to be weakly positioned in the A-rating category. We believe that the company's elevated capital spending and ongoing shareholder remuneration is reducing its financial flexibility; pro forma for this new issuance and the March maturity, we expect Air Product's gross debt to remain around current levels," Anthony Hill, a Moody's vice president and senior credit officer, said in an agency news release.

The agency said Air Products' A2 rating is supported by the company's leading position as a global supplier of industrial gases, the characteristics of the industrial gas market (high barriers to entry, long term take-or-pay contracts, greater pricing flexibility and diverse and stable customer base) and the company’s very diverse customer base.

However, to be adequately positioned in the A2 rating category, Air Products’ leverage should be around 2.0 times debt/EBITDA (versus 2.5 times debt/EBITDA for the last 12 months ended in December 2014), Moody’s said.

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