OREANDA-NEWS. S&P Global Ratings today assigned its 'A-' issue-level rating to Ireland-based Eaton Capital Unlimited Co.'s proposed euro-denominated senior unsecured fixed-rate notes (final amount to be determined). The notes are guaranteed by Eaton Capital's parent, Eaton Corp. PLC, and other guarantors and will rank equally with all of the issuer's existing and future unsecured unsubordinated debt. The company plans to offer a benchmark-size bond and intends to use the net proceeds for general corporate purposes, including to repay some of its existing debt scheduled to mature in 2017.

Eaton Capital Unlimited is a financing subsidiary of Dublin-based holding company Eaton Corp. PLC. One of the group's major operating companies is Cleveland–based Eaton Corp. (Eaton). Eaton benefits from its strong position as a well-diversified power management company that generates roughly $20 billion in annual sales and $2.5 billion in adjusted free cash flow over a broad geographic footprint. The company competes in cyclical and competitive end-markets--including the general industrial, construction, and transportation markets--though its highly engineered, value-added products and good aftermarket sales and services help to partially insulate it from these pressures.

However, Eaton's performance has weakened recently due to a general industrial downturn and, to a smaller extent, negative foreign-currency headwinds. We forecast that the company's credit measures will remain somewhat stretched over the next several quarters, though they could improve once the demand for heavy trucks stabilizes and the company begins to meaningfully realize the benefits of management's cost-restructuring efforts. We estimate that the company's funds from operations (FFO)-to-debt ratio remained below 28% for the 12 months ended June 30, 2016, and expect that the measure may just barely exceed 30% by the end of 2017.