S&P rates Stanley Black & Decker units BBB+

S&P said it assigned a BBB+ rating to Stanley Black & Decker Inc.'s $650 million equity units consisting of a purchase contract and one share of 0% series C cumulative perpetual convertible preferred stock.

The agency said it considers the units to have high equity content because it expects the convertible preferred stock will be converted to equity or be repaid with subsequent re-marketing proceeds in 2020.

The company will receive a second $650 million tranche of common equity proceeds in 2020, which it may use to settle the convertible preferred stock, S&P said.

The proceeds will be used for general corporate purposes, including the repayment of its short-term borrowings, the agency said.

The company used these short-term borrowings to partially fund its recent acquisitions of Newell Tools and Sears' Craftsman brand for a total of about $2.35 billion, S&P explained.

The A/A-1 corporate credit rating and stable outlook are unchanged, reflecting the company's leading positions in security products and hand, power and industrial tools, the agency said.

The ratings also consider its broad geographic and product diversity, S&P said, and its low debt leverage.

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