...- Global building products and solutions provider Johnson Controls International PLC (JCI) announced it entered into an agreement to sell its residential and light commercial (R&LC) heating, ventilation, and air conditioning (HVAC) businesses for approximate net proceeds of $5 billion. - While JCI has not committed to a specific amount of debt reduction using sale proceeds, we believe that over the next few years the company will continue to maintain its S&P Global Ratings-adjusted leverage in the high-2x-3x range. While this level of leverage provides limited cushion relative to our downside threshold, we believe the company could reduce returns to shareholders to mitigate the leveraging impacts of potential EBITDA declines - Further, while the divestitures result in a modest reduction in JCI's scale and scope of operations, we expect JCI will maintain its solid position in the large applied HVAC market, which we believe will experience demand tailwinds over the next few years. - Therefore,...
