Hubbell (HUB-A) Outlook Revised to Negative by S&P

Standard & Poor's Ratings Services said today that it has revised its outlook on Hubbell (NYSE: HUB-A) to negative from stable.

At the same time, we affirmed all of our ratings on the company, including our 'A/A-1' corporate credit rating.

"The outlook revision reflects our expectation that Hubbell's credit measures will weaken because of the company's decision to repurchase $250 million of its common stock and pay $200 million to its class A stockholders, which it will partially fund with debt," said Standard & Poor's credit analyst Svetlana Olsha. "As a result, we believe that the company will have minimal headroom for debt-financed acquisitions or additional sizeable share repurchases going forward. We also believe that this could indicate a departure from the conservative financial policies that the company has adhered to in the past," said Ms. Olsha.

The negative outlook reflects the risk that Hubbell's credit measures could weaken below our expectations for a minimal financial risk profile because of less conservative financial policies combined with a weaker-than-expected operating performance.

We could lower our ratings on Hubbell if the company pursues large debt-financed acquisitions or additional share repurchases that cause its debt-to-EBITDA metric to increase above 1.5x and its FFO-to-debt ratio to remain below 60% for an extended period. We could also lower our rating on the company if we believe that its financial policy no longer supports the 'A' rating.

We could revise the outlook on Hubbell back to stable if the company restores its credit measures and demonstrates a financial policy that will allow it to maintain what we view as a minimal financial risk profile, specifically a debt-to-EBITDA metric below 1.5x and a FFO-to-debt ratio of greater than 60%.

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