S&P upgrades Trane

S&P said it raised its all ratings on Trane Technologies plc, including the issuer rating to BBB+ from BBB.

The agency noted Trane beat S&P’s previous forecast through the first half of 2023.

“We expect continued good performance over our forecast period, supported by ongoing demand for commercial HVAC products and services and Trane's elevated backlog. We forecast revenue growth of around 10% in 2023 driven by strength in the company's commercial HVAC business, which we anticipate will be partially offset by softness in residential HVAC markets due to industry destocking and pull-forward demand during and immediately following the pandemic (residential accounts for only about 20% of Trane's total revenues).

“Commercial HVAC markets continue to benefit from energy efficiency, sustainability, and indoor air quality trends, which is driving growth across many verticals including data centers, education, health care, and high-tech industrial,” S&P said in a statement.

The agency said it expects Trane’s S&P Global Ratings-adjusted FOCF to be about $2.2 billion in 2023 and $2.4 billion to $2.5 billion in 2024, following about $1.6 billion in 2022.

The outlook is stable.

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