Projo Biz Blog

Providence-based Textron Inc. had its debt ratings lowered by Moody's Investors Service on concern that the finance division's pace of collections will be slower than expected.

Moody's cut Textron's rating to Baa2, or two levels above junk, with a negative outlook, from Baa1, the agency said. The rating affects about $6.5 billion of debt, Moody's said.

The finance unit's "scheduled debt maturities beginning later in the year are unlikely to be satisfied solely by collections on the portfolio," Moody's analyst Bob Jankowitz wrote in a note. The division "will become more reliant on alternatives such as refinancing a portion of the maturing debt or asset sales, for which market conditions are challenging at this time."

Textron said last month it will wind down most of its finance unit, selling or liquidating $7.9 billion of the division's $11.4 billion in managed receivables, to focus mostly on funding purchases of its own products.

Moody's predicted that the company's financial flexibility will be limited amid slower collections and as demand for business jets begins to weaken during the second half of this year, hurting profit.

Stock in Textron (TXT:NYSE) closed Tuesday at $12.45 a share, off $1.60 a share.

 Tags  Moody's Investors Service Textron

---