Kennametal’s long-term default rating was downgraded by Fitch ratings, which pointed to the company’s declining sales and margins amid the global economic crisis.
Fitch lowered Kennametal’s issuer default rating, and its senior unsecured bank facilities and senior unsecured debt ratings, to “BBB-” from “BBB.”
According to the agency, Kennametal’s rating reflects “the likelihood of weakening leverage and limited free cash flow through much of calendar 2009.”
Kennametal, which manufactures metal-cutting tools and highway construction equipment, was cited in the report as struggling with declining sales and margins. A sharp slowdown among Kennametal’s industrial customers contributed to much lower orders starting in November.
“It is unclear when demand could stabilize,” Fitch said.