Fitch Expects to Rate Parker Hannifin's New $300MM Sr Unsecured Debt at 'A'

Fitch Ratings expects to assign a rating of 'A' to Parker Hannifin Corporation's (NYSE: PH) planned $300 million of senior unsecured notes. The Rating Outlook is Stable. Proceeds from the notes offering will be used to reduce borrowings and for general corporate purposes.

The key rating drivers are PH's liquidity position, healthy free cash flows, and broad portfolio that serves a highly diversified customer base. PH's conservative financial management and increased end market demand have contributed to improved credit metrics. As of June 30, 2010, PH's debt to latest 12 months (LTM) operating EBITDA ratio was 1.4 times (x) compared to a recent high of 2.3x as of Sept. 30, 2009. In fiscal 2010, PH focused on the repayment of debt, while limiting discretionary spending to principally planned share repurchases, during the recession and reduced debt balances by approximately $500 million. Fitch anticipates that leverage will further improve as debt balances remain stable and operating results continue to slowly rebound.