Moody's raised Masco Corp. to investment grade, moving the building products maker's senior unsecured rating to Baa3 from Ba1, with a stable outlook.
The upgrade reflects the rating agency's expectations that the building supplies company will continue to increase operating profits and resulting cash flows, which are driving further improvement in debt credit ratios.
"We project adjusted EBITA margins near 16%, comparable to 15.9% for FY17, and close to its near-record high of 16.3% achieved in 2004," the rating agency said.
Moody's said the investment-grade rating also reflects Masco's robust liquidity profile. Cash on hand and short-term investments of $1.3 billion for fiscal year-end 2017 are more than enough to finance first-quarter working capital and capital expenditure needs, the acquisition of Kichler Lighting, and the company's notes due in April, the rating agency added.