Last checked at 
(Alliance News) - Moody's investor Service assigned a Baa3 rating to Ashtead Group PLC's proposed USD1.00 billion second senior secured notes offering.
Moody's said the company's outlook remains stable.
Ashtead Capital - a wholly owned subsidiary of the industrial rental equipment firm - is conducting a private offering of USD1.00 billion second priority senior secured notes due 2028 and second priority senior secured notes due 2029. The notes will be fully and unconditionally guaranteed on a senior secured basis.
Ashtead intends to use the net proceeds from the offering to fund its cash tender offer for Ashtead Capital's USD500 million outstanding 5.625% notes due 2024.
Moody's said the rating reflects the "growing scale" of Ashtead's business - which has benefited from sustained organic growth at "well above" market rates over the last eight years. This has consolidated Ashtead's number two position in US markets and number one position in UK markets, Moody's said.
The credit ratings agency also noted the expectation of continued revenue and earnings growth over the next 12 to 18 months as a reason for the rating. This is supported by "strong market" dynamics in the US and Canada, Moody's added.
Moody's said Ashtead maintaining its net leverage within its target range and its "good" liquidity profile for the rating.
"The rating remains constrained by the company's exposure to cyclical end markets; its weak free cash flow generation after its large fleet capital spending and dividends; and the expectation that credit metrics are unlikely to improve materially," Moody's said.
The rating agency continued: "Ashtead has a good corporate governance track record and has demonstrated adherence to a prudent financial policy over many years which Moody's regards as commensurate with the company's rating level."
Moody's also commended Ashstead's "favourable" debt maturity profile.
The stable outlook reflects Moody's expectation Ashtead will maintain a conservative financial policy with no major debt-funded acquisitions and continued "moderate" growth in the industry.
Shares in Ashtead closed 2.3% higher in London on Monday at 2,321.00 pence each.
By Paul McGowan; paulmcgowan@alliancenews.com
Copyright 2019 Alliance News Limited. All Rights Reserved.
