Yesterday, the proposed offering of senior unsecured notes by
) was assigned an "A3" rating by Moody's Investors Service of
). The rating agency also bestowed a "(P)A3" on the company's
shelf registration for senior unsecured debt.
Further, Moody's affirmed the senior unsecured rating of
Cummins at "A3" and maintained a stable outlook on all the
ratings. The company plans to issue senior unsecured notes worth
$1 billion to buy back the residual equity stake in its
partly-owned U.S. and Canadian distribution operations, apart
from using the proceeds for general corporate needs.
The ratings were based on the financial liquidity of Cummins
along with the expectations that the purchase of the balance
equity stake in the distribution operations will boost its
competitive strength in North America. The purchase is also
expected to maintain the strong credit metrics that are required
for the "A3" rating.
As Cummins has held a partial stake in the U.S. and Canadian
distribution operations for a long time, the acquisition should
not pose any integration issues. Moreover, the company is
expected to earn good returns on the investment.
Cummins is a leading worldwide designer, manufacturer and
distributor of diesel and natural gas engines, electric power
generation systems and engine-related components, fuel systems,
controls and air handling systems. Currently, Cummins retains a
Zacks Rank #3 (Hold).
Other stocks that are performing well in the industry include
American Axle & Manufacturing Holdings Inc.
Weichai Power Co. Ltd
). Both are Zacks Rank #1 (Strong Buy) stocks.
AMER AXLE & MFG (AXL): Free Stock Analysis
CUMMINS INC (CMI): Free Stock Analysis Report
MOODYS CORP (MCO): Free Stock Analysis Report
WEICHAI POWER (WEICY): Get Free Report
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