Text-S&P affirms Airgas BBB, assigns A-2 to CP program

Thu Sep 8, 2011 1:32pm EDT

(The following statement was released by the rating agency.)
-- We are assigning our 'A-2' short-term rating to Airgas Inc.'s new $750
million commercial paper (CP) program.
-- We are simultaneously affirming the existing ratings on Airgas,
including the 'BBB' long-term corporate credit rating with stable outlook.
NEW YORK (Standard & Poor's) Sept. 8, 2011--Standard & Poor's Ratings Services
said today that it assigned its 'A-2' short-term rating to Airgas (ARG.N)
Inc.'s $750
million commercial paper (CP) program. The company intends to use the CP
program for general corporate purposes. Backing the program is the company's
$750 million revolving credit facility expiring in July 2016.
At the same time, Standard & Poor's affirmed its 'BBB' corporate credit rating
and other existing ratings on Airgas. The long-term rating outlook is stable.
"The company's strong business fundamentals, including its leading position in
the North American industrial gas market, and significant barriers to
competitive entry support credit quality," said Standard & Poor's credit
analyst Liley Mehta.
The ratings on Radnor, Pa.-based Airgas Inc. reflect its position as the
leading North American distributor of industrial gases and related hardgoods
(e.g., welding equipment, safety supplies, and tools), respectable operating
margins, and stable cash flows. However, the moderate cyclicality of the
manufacturing and industrial markets the company serves tempers its strengths,
as do management's financial policies favoring incremental debt-financed
acquisitions to complement organic growth. Standard & Poor's characterizes
Airgas' business risk profile as strong and its financial risk profile as
significant.
Industrial gas distribution has favorable business attributes, including good
growth prospects, solid internal funds generation and pricing, and
consolidation trends that favor industry leaders. About 50% of the estimated
$13 billion U.S. packaged gases and welding hardgoods market consists of local
and regional independent companies--most competitors for a service area are
within a geographic radius of 50 to 75 miles--which presents considerable
consolidation opportunities. Generating annual sales of about $4.4 billion,
Airgas has an estimated 25% of the U.S. market, which is a service-intensive
business.
RELATED CRITERIA AND RESEARCH
  -- Business Risk/Financial Risk Matrix Expanded, May 27, 2009
  -- Key Credit Factors: Business and Financial Risks In The Commodity And
Specialty Chemical Industry, Nov. 20, 2008
Complete ratings information is available to subscribers of RatingsDirect on
the Global Credit Portal at www.globalcreditportal.com. All ratings affected
by this rating action can be found on Standard & Poor's public Web site at
www.standardandpoors.com. Use the Ratings search box located in the left
column.
Primary Credit Analyst: Liley Mehta, New York (1) 212-438-1263;
                     liley_mehta@standardandpoors.com
Secondary Credit Analyst: Henry Fukuchi, New York (1) 212-438-2023;
                       henry_fukuchi@standardandpoors.com
(New York Ratings team)
(email: Harold.Barnett@thomsonreuters.com;
Reuters messaging: harold.barnett.thomsonreuters.net; Tel: +1-646-223-4186))
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