(The following statement was released by the rating agency)
March 31 - Moody's Investors Service assigned a Baa1 rating to Ingersoll-Rand Global Holding Company Limited's (IR Global) $300 million of exchangeable senior notes due 2012 and its proposed senior note offering. Both note issuances are fully and unconditionally guaranteed by IR Global's parent Ingersoll-Rand Company Limited (Ingersoll). The rating Outlook is Negative. Proceeds from the notes will help to refund a bridge loan maturing in June and other current debt maturities. The Baa1 rating reflects Ingersoll's highly competitive position in its core markets of heating, ventilation and air conditioning systems, building security products, food refrigeration systems, and equipment and tools that improve industrial efficiency. The rating also recognizes Moody's expectation that despite weakness in many of Ingersoll's markets, the company's free cash generation should enable it to continue reducing the debt taken on to fund the 2008 acquisition of Trane, Inc. Moody's expects that free cash generation available for debt reduction during 2009 will exceed $500 million. The negative outlook reflects Moody's expectation that a downturn in Ingersoll's key end markets -- particularly US residential and non-residential construction, refrigerated trucking, and the commercial refrigeration markets -- will result in free cash flow being lower than originally expected, and will consequently prolong the pace at which the company will be able to reduce the remaining $3 billion in acquisition debt and strengthen its credit metrics. Prior to the current downturn, Moody's had expected that Ingersoll's annual free cash flow available for debt reduction would approximate $1 billion. We had also anticipated that the company's credit metrics would weaken subsequent to the acquisition, but that the rapid pace of debt repayment would restore metrics to a level solidly supportive of the Baa1 rating by the end of 2009. Moody's now anticipates that the downturn in Ingersoll's markets will delay the originally expected pace of debt reduction and improvement in credit metrics by approximately one year. Debt levels and credit metrics could approximate levels consistent with a Baa1 rating by 2010 if Ingersoll is successful at achieving its cost reduction initiatives. In assigning the ratings, Moody's noted it does not expect that Ingersoll's plan to reincorporate from Bermuda to Ireland will have any detrimental impact on the degree of credit protection afforded to the rated debt issued by IR Global. Moody's anticipates that appropriate downstream guarantees for the IR Global debt will be maintained, and that the asset base, earnings capacity, and cash flow generating ability of the IR Global's subsidiaries will be unaffected by the reincorporation. Ingersoll's current liquidity position consists of $2.25 billion in committed credit facilities with maturities of greater than one year and free cash flow that should exceed $500 million. These resources provide adequate coverage of maturing debt obligations which, at year end 2008, included: approximately $1 billion in commercial paper; the June maturity of its $754 million bridge loan; the June maturity of approximately $200 million of Trane debt; and the potential put of $307 million of senior notes in November 2009. The proposed debt issuances would further bolster the adequacy of this liquidity position. The last rating action on Ingersoll was a change in the Outlook to Negative on February 12, 2009. The principal methodology used in rating Ingersoll was the Global Manufacturing Methodology, which can be found at www.moodys.com in the Credit Policy & Methodologies directory, in the Ratings Methodologies subdirectory. Other methodologies and factors that may have been considered in the process of rating Ingersoll can also be found in the Credit Policy & Methodologies directory.