Moody's: Snap-on notes Baa1

Moody's Investors Service said it assigned a Baa1 rating to Snap-on Inc.'s new $250 million senior notes due 2018 and affirmed the company's Baa1 senior rating and Prime-2 short-term rating.

The outlook is stable.

Proceeds from these notes will be used for general corporate purposes, including the repayment of all or a portion of the company's $200 million 6.25% senior notes due August 2011.

The agency said Snap-on's Baa1 rating is supported by its global presence, reputation for superior quality products, leading share of the U.S. market for automotive tools and diagnostic equipment for professional repair centers, historically stable operating performance and its core operations' ability to generate consistently solid free cash flow.

Notwithstanding these strengths, the Baa1 rating also reflects the increased risks associated with higher borrowing needs as Snap-on provides financing for new contract originations to its franchisees and funds customer receivables originated by Snap-on Credit on its balance sheet, the agency said. The rating is also constrained by Moody's expectation that demand will remain weak in the intermediate term.

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