New York, March 16, 2023 — Moody’s Investors Service (“Moody’s”) placed the Baa2 senior unsecured ratings of Trane Technologies Global Holding Co. Ltd., Trane Technologies Company LLC, Trane Technologies Luxembourg Finance S.A. and Trane Technologies Financing Limited under review for upgrade. At the same time, Moody’s affirmed the Prime-2 commercial paper ratings of Trane Technologies Financing Limited and Trane Technologies Holdco Inc. All of these entities are direct or indirect subsidiaries of Trane Technologies plc (“Trane”). The outlook, previously stable, was changed to rating under review.
The ratings review for upgrade reflects Moody’s expectation that Trane’s revenue will continue to grow, driven by both commercial HVAC (heating, ventilation and air conditioning) demand and positive pricing actions. These factors will generate strong cash flow levels, and the company’s robust backlog will provide good revenue visibility. Â
The affirmation of the Prime-2 commercial paper ratings is based on Moody’s expectation that Trane’s liquidity will remain very strong over the next 12 to 18 months. Â It also reflects Moody’s view that a potential upgrade of the senior unsecured ratings resulting from this review will be limited to one notch.
On Review for Upgrade:
..Issuer: Trane Technologies Company LLC
….Backed Senior Unsecured Regular Bond/Debenture, Placed on Review for Upgrade, currently Baa2
..Issuer: Trane Technologies Global Holding Co. Ltd.
….Backed Senior Unsecured Regular Bond/Debenture, Placed on Review for Upgrade, currently Baa2
..Issuer: Trane Technologies Financing Limited
….Backed Senior Unsecured Regular Bond/Debenture, Placed on Review for Upgrade, currently Baa2
..Issuer: Trane Technologies Luxembourg Finance S.A.
….Senior Unsecured Regular Bond/Debenture, Placed on Review for Upgrade, currently Baa2
….Backed Senior Unsecured Regular Bond/Debenture, Placed on Review for Upgrade, currently Baa2
Affirmations:
..Issuer: Trane Technologies Financing Limited
….Backed Commercial Paper, Affirmed P-2
..Issuer: Trane Technologies HoldCo Inc.
….Backed Commercial Paper, Affirmed P-2
Outlook Actions:
..Issuer: Trane Technologies Company LLC
….Outlook, Changed To Rating Under Review From Stable
..Issuer: Trane Technologies Global Holding Co. Ltd.
….Outlook, Changed To Rating Under Review From Stable
..Issuer: Trane Technologies Financing Limited
….Outlook, Changed To Rating Under Review From Stable
..Issuer: Trane Technologies Luxembourg Finance S.A.
….Outlook, Changed To Rating Under Review From Stable
RATINGS RATIONALE
Notwithstanding the ratings review, Trane’s Baa2 senior unsecured rating reflects the company’s sizable revenue base of approximately $16 billion, strong brand recognition, geographic diversity and strong cash generation. The company holds a strong market position in the global heating, ventilation and air conditioning (“HVAC”) equipment and services end market. Moody’s expects that the company’s exposure to the commercial and residential HVAC markets as well as transport refrigeration business will enable it to continue to benefit from the different dynamics underlying each market. Continued strength in the commercial and refrigeration end markets will offset the continued normalization in the residential market from record levels during the coronavirus pandemic. Strong liquidity and a well-balanced capital allocation policy also underpin Moody’s credit view of the company.
At the same time, Moody’s views the company’s businesses as being cyclical, in particular the company’s transport business. Further, Trane is not immune to current and near term inflationary cost pressures, as well as supply chain challenges. Moody’s also believes the company’s residential HVAC business will experience some moderation this year. However, Moody’s expects demand for the company’s products in certain end markets to remain resilient and margins to improve due to the realization of pricing actions and benefits from operating efficiencies.
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS
Moody’s ratings review will focus on the resiliency of HVAC sector trends. Moody’s will also consider Trane’s financial policy, including capital allocation priorities and management of financial leverage, as part of the ratings review.
The principal methodology used in these ratings was Manufacturing published in September 2021 and available at https://ratings.moodys.com/api/rmc-documents/74970. Alternatively, please see the Rating Methodologies page on https://ratings.moodys.com for a copy of this methodology.
Ireland-based Trane Technologies plc is a global manufacturer focused on climate systems, including residential and commercial HVAC systems and transport temperature control solutions. The company’s fiscal year ended December 31, 2022 revenues totaled $16.0 billion.
REGULATORY DISCLOSURES
For further specification of Moody’s key rating assumptions and sensitivity analysis, see the sections Methodology Assumptions and Sensitivity to Assumptions in the disclosure form. Moody’s Rating Symbols and Definitions can be found on https://ratings.moodys.com/rating-definitions.
For ratings issued on a program, series, category/class of debt or security this announcement provides certain regulatory disclosures in relation to each rating of a subsequently issued bond or note of the same series, category/class of debt, security or pursuant to a program for which the ratings are derived exclusively from existing ratings in accordance with Moody’s rating practices. For ratings issued on a support provider, this announcement provides certain regulatory disclosures in relation to the credit rating action on the support provider and in relation to each particular credit rating action for securities that derive their credit ratings from the support provider’s credit rating. For provisional ratings, this announcement provides certain regulatory disclosures in relation to the provisional rating assigned, and in relation to a definitive rating that may be assigned subsequent to the final issuance of the debt, in each case where the transaction structure and terms have not changed prior to the assignment of the definitive rating in a manner that would have affected the rating. For further information please see the issuer/deal page for the respective issuer on https://ratings.moodys.com.
For any affected securities or rated entities receiving direct credit support from the primary entity(ies) of this credit rating action, and whose ratings may change as a result of this credit rating action, the associated regulatory disclosures will be those of the guarantor entity. Exceptions to this approach exist for the following disclosures, if applicable to jurisdiction: Ancillary Services, Disclosure to rated entity, Disclosure from rated entity.
The ratings have been disclosed to the rated entity or its designated agent(s) and issued with no amendment resulting from that disclosure.
These ratings are solicited. Please refer to Moody’s Policy for Designating and Assigning Unsolicited Credit Ratings available on its website https://ratings.moodys.com.
Regulatory disclosures contained in this press release apply to the credit rating and, if applicable, the related rating outlook or rating review.
Moody’s general principles for assessing environmental, social and governance (ESG) risks in our credit analysis can be found at https://ratings.moodys.com/documents/PBC_1288235.
The Global Scale Credit Rating on this Credit Rating Announcement was issued by one of Moody’s affiliates outside the EU and is endorsed by Moody’s Deutschland GmbH, An der Welle 5, Frankfurt am Main 60322, Germany, in accordance with Art.4 paragraph 3 of the Regulation (EC) No 1060/2009 on Credit Rating Agencies. Further information on the EU endorsement status and on the Moody’s office that issued the credit rating is available on https://ratings.moodys.com.
The Global Scale Credit Rating on this Credit Rating Announcement was issued by one of Moody’s affiliates outside the UK and is endorsed by Moody’s Investors Service Limited, One Canada Square, Canary Wharf, London E14 5FA under the law applicable to credit rating agencies in the UK. Further information on the UK endorsement status and on the Moody’s office that issued the credit rating is available on https://ratings.moodys.com.
Please see https://ratings.moodys.com for any updates on changes to the lead rating analyst and to the Moody’s legal entity that has issued the rating.
Please see the issuer/deal page on https://ratings.moodys.com for additional regulatory disclosures for each credit rating.
Jadijhe (Gigi) Adamo
Vice President – Senior Analyst
Corporate Finance Group
Moody’s Investors Service, Inc.
250 Greenwich Street
New York, NY 10007
U.S.A.
JOURNALISTS: 1 212 553 0376
Client Service: 1 212 553 1653
Jonathan Kanarek, CFA
Associate Managing Director
Corporate Finance Group
JOURNALISTS: 1 212 553 0376
Client Service: 1 212 553 1653
Releasing Office:
Moody’s Investors Service, Inc.
250 Greenwich Street
New York, NY 10007
U.S.A.
JOURNALISTS: 1 212 553 0376
Client Service: 1 212 553 1653
