Fitch cuts Masco outlook to negative

Fitch Ratings said it affirmed Masco Corp.'s issuer default and senior unsecured debt ratings at BBB+ and revised the outlook to negative from stable to reflect the weakening trend in the company's margins and credit metrics, lower expected sales this year due to an anticipated further decline in housing starts for 2007 and the expectation that the company will continue its aggressive share repurchase program.

The agency said the ratings for Masco are based on the company's leading market position, with strong brand recognition in its various business segments; the attractive characteristics of the residential home improvement market; the breadth of its product offerings; and its solid free cash flow generation.

Risk factors include the company's sensitivity to general economic trends, its customer concentration, the cyclicality of the residential construction market, continued consolidation of the company's customer base and volatile raw material and commodity costs, Moody's said.

The company's debt-to-EBITDA ratio increased to 2.9x in 2006 from 2.5x in 2005.

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