Moody’s gives Baa3 to Keysight

Moody's Investors Service said it assigned a Baa3 senior unsecured issuer rating to Keysight Technologies, Inc. in anticipation of a $1.1 billion senior unsecured notes offering in the near-term.

The outlook is stable.

Proceeds will be used to pay a one-time distribution to Agilent Technologies, Inc. as part of a transaction in which Keysight will be spun-off to Agilent's existing shareholders.

Moody’s said the Baa3 senior unsecured issuer rating reflects the company's leading market position in the Test Instrument industry, strong liquidity, and modest leverage given the expectation of consistent free cash flow generation.

The rating also reflects management's stated intention to maintain a very conservative financial policy, including foregoing equity distributions beyond the planned one-time $900 million distribution to Agilent until Keysight has achieved a net cash position, the agency said. Management has further stated its intention to limit the return of capital to equity, instead using share repurchases to offset dilution from equity-based compensation.

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