S&P rates Stanley Black & Decker convertibles BBB+

Standard & Poor's said it assigned a BBB+ rating to Stanley Black & Decker Inc.'s proposed convertible preferred units.

The company said it expects the units will initially consist of $550 million aggregate principal amount of junior subordinated notes due 2018 and contracts to purchase, for an aggregate of $550 million, shares of convertible preferred stock.

The proceeds will be used to redeem the currently outstanding 5.902% fixed-rate/floating-rate junior subordinated debt securities due 2045, improve the funded status of pension obligations and reduce outstanding short-term borrowings, the agency said.

While the preferred units will not receive formal equity credit under the agency's hybrid criteria for financial ratio analysis, the agency said it recognizes the qualitative benefits these securities provide.

S&P said it recognizes that this security provides the company with increased financial flexibility and incorporates that qualitatively into the rating. But, it has treated the convertible preferred units as 100% debt in its financial ratios based on several features that fall short of the criteria for formally attributing 'equity content' to hybrid capital.

The ratings also consider its strong market positions in a wide array of tools and hardware products for use in a broad group of construction markets, good geographic diversity, a competitive cost structure and a strong and growing market presence in the recession-resistant security products and services segment, the agency said.

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