Moody’s changes Masco to positive

Moody's Investors Service said it changed Masco Corp.’s outlook to positive from stable, driven by anticipated debt reduction and improving operating performance.

The agency affirmed the company's Ba2 corporate family rating, Ba2-PD probability of default rating and the Ba2 ratings assigned to its senior unsecured notes.

The speculative grade liquidity rating of SGL-1 was affirmed.

Moody’s said the outlook change results from its expectations that the company will pay down debt, extend the remaining balance of its near-term maturing notes and grow operating profits organically, resulting in debt credit metrics supportive of higher ratings.

Over the next 12 to 18 months, the agency projects Masco's EBITA margins approaching 13.75% from 13.3% for FY15. It now forecasts interest coverage (measured as EBITA-to-interest expense) nearing 4.5 times by mid-2017 compared to 3.7 times for 2015, and debt leverage in the range of 3 times over the same time horizon from 3.6 times at FYE15 (ratios incorporate Moody's standard adjustments for operating leases and pension liabilities).

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