Moody's: Kennametal notes Baa2

Moody's Investors Service said it assigned a provisional Baa2 senior unsecured rating to Kennametal Inc.'s shelf registration and a Baa2 rating to the proposed $300 million senior unsecured note drawdown under the shelf.

The company's existing Baa2 senior unsecured ratings were affirmed.

The outlook is stable.

The proceeds will be used for the repayment of Kennametal's existing 7.2% $300 million senior unsecured notes due June 2012.

Pending such use, the proceeds will be used for the repayment of any outstanding borrowings under the company's $600 million revolving credit facility due 2016 or for general corporate purposes.

The ratings reflects the refinancing nature of this transaction, enhanced liquidity due to the extension of debt maturity profile and the company's comfortable credit metrics for the Baa2 rating category, Moody's said.

The ratings are supported by the company's position as a leading global supplier of tooling and engineered components, broad customer and geographic diversity, conservative financial policies and focus on debt reduction, the agency said.

Kennametal's limited overall size, vulnerability to cyclical end markets and exposure to volatile input costs constrain the rating, Moody's said.

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