S&P affirms BBB rating for Masco, revises rating outlook to negative from stable amid uncertain operating environment, sharply rising oil prices

NEW YORK , March 3, 2011 (press release) – Standard & Poor's Ratings Services said today it revised its rating outlook on Masco Corp. to negative from stable. At the same time, we affirmed our ratings on the company, including the 'BBB' corporate credit rating.

The rating outlook revision reflects the risk that Masco's credit measures could be weaker than we expect for the next one to two years because of a potentially slower recovery in new residential construction, prospects for stalled remodeling spending if consumer confidence wanes, weaker European demand, and a still difficult consumer credit environment. "Although our ratings consider the housing cycle and Masco's strong liquidity (a key factor in our analysis), we believe that current global uncertainties and sharply rising oil prices may cause a more challenging near-term outlook for consumer-oriented building products demand," said Standard & Poor's credit analyst Pamela Rice.

The ratings on Taylor, Mich.-based Masco Corp. reflect the company's satisfactory business risk profile that incorporates its leading market positions for a broad range of brand-name products in the home improvement and residential construction markets, as well as its extensive and diverse distribution network.

"We believe Masco's credit metrics in the near term will likely be more in line with a significant financial risk profile, which in combination with its satisfactory business risk profile could be consistent with a lower rating," said Ms. Rice. "However, the company's strong liquidity, demonstrated ability to generate sizable free cash flow even during a severe downturn, and very prudent financial policies, enhance our view of the company's overall financial risk profile as intermediate, supporting the 'BBB' rating."

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