Fitch downgrades Eaton

Fitch Ratings said it downgraded Eaton Corp.'s issuer default rating to BBB+ from A-, along with its senior unsecured bank credit facilities to BBB+ from A- and senior unsecured long-term debt to BBB+ from A-.

The agency also affirmed its short term issuer default rating and commercial-paper rating at F2.

The outlook is negative.

The downgrades reflect the anticipated increase in the company's debt and leverage associated with its pending acquisition of Cooper Industries plc, Fitch said.

Eaton expects to fund the $11.8 billion deal with equity, available cash and about $5.1 billion of new debt.

The agency said it estimates the pro forma debt-to-EBITDA ratio will be about 3.3x after the acquisition compared to Eaton's standalone leverage of 1.84x at the end of September.

The negative outlook reflects the potential for sustained high leverage if Eaton is unable to realize expected synergies following its acquisition of Cooper, S&P said, or if financial results are pressured by a slowdown in Eaton's electrical and other industrial end markets.

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