S&P: Pitney Bowes Inc. $600 Million Senior Unsecured Notes Assigned 'BBB' Rating
Pitney Bowes intends to apply the net proceeds from the transaction to refinance the entirety of its $300 million preferred stock, and the remainder to general corporate purposes, which may include the repayment of indebtedness. We view this transaction as consistent with Pitney Bowes' intermediate financial policy and risk profile, and expect that the company's leverage, including our adjustments for operating leases, pensions, and surplus cash, will remain in the 2.5x area in 2016 and 2017.
The stable rating outlook on Pitney Bowes reflects our expectation that the company will experience gradual moderation of its low-single-digit revenue declines in 2016 and 2017 and maintain consistent cash flow generation and margins, supported by ongoing restructuring and cost-saving activities. Although less likely, we could lower our corporate credit rating on Pitney Bowes if management pursues more aggressive financial policies, including more significant debt-financed acquisitions or share repurchases, with adjusted leverage sustained in the mid - to high-2x area. We could also consider raising the rating if the company succeeds in achieving sustainable revenue and earnings growth, while also maintaining adjusted leverage below 2x.