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By clicking “I AGREE” [at the end of this document], you indicate that you understand and intend these terms and conditions to be the legal equivalent of a signed, written contract and equally binding, and that you accept such terms and conditions as a condition of viewing any and all Moody’s inform​ation that becomes accessible to you [after clicking “I AGREE”] (the “Information”).   References herein to “Moody’s” include Moody’s Corporation, Inc. and each of its subsidiaries and affiliates.

 

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Rating Action:

Moody's assigns P-2 short-term rating to JCI plc, downgrades and will withdraw ratings on subsidiaries' notes to be exchanged

28 Dec 2016

New York, December 28, 2016 -- Moody's Investors Service assigned a P-2 Short-term rating to Johnson Controls International plc (JCI plc), which will issue commercial paper going forward instead of its subsidiary, Johnson Controls, Inc. (JCI). JCI's outstanding commercial paper will be repaid by early-February 2017, at which time JCI's P-2 short-term rating will be withdrawn. JCI plc's long-term rating of Baa1 and stable outlook are not affected.

Moody's also downgraded the long-term ratings of the senior unsecured notes of JCI and Tyco International Finance S.A. (TIFSA) to Baa2 from Baa1, with the completion of the exchange for new JCI plc notes scheduled to settle today. Moody's will also withdraw the ratings on all of the JCI and TIFSA notes that were not tendered in the exchange and the issuer rating of JCI, as Moody's expects that there will not be sufficient information available going forward to maintain the ratings. Moody's also withdrew the (P)Baa1 Senior unsecured shelf rating of TIFSA, the (P)Baa1 Medium-term note program rating of JCI and TIFSA's P-2 short-term rating as this entity no longer issues commercial paper. Subsidiary, Tyco International Holdings, S.a.r.l. (TSARL) maintains a $1 billion commercial paper program.

RATINGS RATIONALE

On 28 November 2016, Moody's assigned Baa1 ratings to the 18 series of new senior unsecured notes that JCI plc will issue in the Exchange Offer. The effect of the debt exchange and the new commercial paper program will be to simply the group's debt structure, with JCI plc as the main issuer of debt going forward. The company will also have more flexibility to move assets and operations among its legal entities, making the financial position of the TIFSA and JCI subsidiaries uncertain.

The downgrades of the JCI and TIFSA ratings reflect the weakened position of these obligations following the exchange because of the lack of protective covenants. A sufficient number of debt holders of JCI and TIFSA tendered and consented to the stripping of covenants pursuant to the terms of the Exchange Offer, including the requirement to provide financial statements for these issuers. The ratings will be withdrawn because without financial statements, Moody's will be unable to effectively monitor the creditworthiness of TIFSA or of JCI.

JCI plc will have two commercial paper programs, a $2 billion US-program as well as a €2 billion Euro-program. Commercial paper will be supported by a committed $2 billion revolving credit facility and cash expected to be at least $300 million. JCI plc is anticipated to generate consolidated free cash flow of about $1 billion, of which about 40% will be from the legacy Tyco operations and earmarked for reduction of debt at TSARL.

Johnson Controls International plc, headquartered in Cork, Ireland is the ultimate holding company of Johnson Controls, Inc. and Tyco International Finance S.A. Johnson Controls, Inc., headquartered in Milwaukee, Wisconsin, is a leading global provider of lead-acid automotive batteries and advanced batteries for hybrid and electric vehicles; and, services and solutions to optimize energy and operational efficiencies of buildings. The Tyco businesses hold leading positions in fire protection and security products and services across global commercial, institutional and government markets. Moody's estimates annual revenue of about $30 billion in fiscal 2017.

Moody's has withdrawn the ratings because it believes it has insufficient or otherwise inadequate information to support the maintenance of the ratings. Please refer to the Moody's Investors Service's Policy for Withdrawal of Credit Ratings, available on its website, www.moodys.com.

Downgrades:

..Issuer: Johnson Controls, Inc.

....Issuer Rating, Downgraded to Baa2 from Baa1

....Senior Unsecured Regular Bond/Debentures, Downgraded to Baa2 from Baa1

..Issuer: Tyco International Finance S.A.

....Senior Unsecured Regular Bond/Debentures, Downgraded to Baa2 from Baa1

Assignments:

..Issuer: Johnson Controls International plc

....Senior Unsecured Commercial Paper, Assigned P-2

Withdrawals:

..Issuer: Tyco International Finance S.A.

....Senior Unsecured Commercial Paper, Withdrawn , previously rated P-2

....Senior Unsecured Shelf, Withdrawn , previously rated (P)Baa1

..Issuer: Johnson Controls, Inc.

....Senior Unsecured Medium-Term Note Program, Withdrawn , previously rated (P)Baa1

The principal methodology used in these ratings was Global Manufacturing Companies published in July 2014. Please see the Rating Methodologies page on www.moodys.com for a copy of this methodology.

REGULATORY DISCLOSURES

For ratings issued on a program, series or category/class of debt, this announcement provides certain regulatory disclosures in relation to each rating of a subsequently issued bond or note of the same series or category/class of debt or pursuant to a program for which the ratings are derived exclusively from existing ratings in accordance with Moody's rating practices. For ratings issued on a support provider, this announcement provides certain regulatory disclosures in relation to the credit rating action on the support provider and in relation to each particular credit rating action for securities that derive their credit ratings from the support provider's credit rating. For provisional ratings, this announcement provides certain regulatory disclosures in relation to the provisional rating assigned, and in relation to a definitive rating that may be assigned subsequent to the final issuance of the debt, in each case where the transaction structure and terms have not changed prior to the assignment of the definitive rating in a manner that would have affected the rating. For further information please see the ratings tab on the issuer/entity page for the respective issuer on www.moodys.com.

For any affected securities or rated entities receiving direct credit support from the primary entity(ies) of this credit rating action, and whose ratings may change as a result of this credit rating action, the associated regulatory disclosures will be those of the guarantor entity. Exceptions to this approach exist for the following disclosures, if applicable to jurisdiction: Ancillary Services, Disclosure to rated entity, Disclosure from rated entity.

The below contact information is provided for information purposes only. Please see the ratings tab of the issuer page at www.moodys.com, for each of the ratings covered, Moody's disclosures on the lead analyst and the Moody's legal entity that has issued the ratings.

Regulatory disclosures contained in this press release apply to the credit rating and, if applicable, the related rating outlook or rating review.

Please see www.moodys.com for any updates on changes to the lead rating analyst and to the Moody's legal entity that has issued the rating.

Please see the ratings tab on the issuer/entity page on www.moodys.com for additional regulatory disclosures for each credit rating.

Jonathan Root
VP - Senior Credit Officer
Corporate Finance Group
Moody's Investors Service, Inc.
250 Greenwich Street
New York, NY 10007
U.S.A.
JOURNALISTS: 212-553-0376
SUBSCRIBERS: 212-553-1653

Robert Jankowitz
MD - Corporate Finance
Corporate Finance Group
JOURNALISTS: 212-553-0376
SUBSCRIBERS: 212-553-1653

Releasing Office:
Moody's Investors Service, Inc.
250 Greenwich Street
New York, NY 10007
U.S.A.
JOURNALISTS: 212-553-0376
SUBSCRIBERS: 212-553-1653

No Related Data.
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MJKK or MSFJ (as applicable) hereby disclose that most issuers of debt securities (including corporate and municipal bonds, debentures, notes and commercial paper) and preferred stock rated by MJKK or MSFJ (as applicable) have, prior to assignment of any credit rating, agreed to pay to MJKK or MSFJ (as applicable) for credit ratings opinions and services rendered by it fees ranging from JPY125,000 to approximately JPY550,000,000.

MJKK and MSFJ also maintain policies and procedures to address Japanese regulatory requirements.

​
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