VF Corp. filed paperwork Thursday to sell  €850 million ($955 million) in seven-year, senior unsecured notes to raise funds for working capital and other general corporate purposes, including the repayment of outstanding commercial paper.

The shelf registration follows a 15-percent slide in VF Corp.’s stock (NYSE:VFC) since late August, when the first of several equity analysts downgraded its stock, citing headwinds at the company’s Outdoor & Action Sports Coalition. On Thursday, Bank of America/Merrill Lynch downgraded the stock to “underperform” from “buy,” saying tepid demand from retailers was likely to slow sales at The North Face, Vans and Timberland.

On Thursday, Moody’s Investors Service affirmed VF Corp.’s credit rating as stable and assigned a provisional A3, or (P)-A3, rating to the pending eurobond issue. Moody’s left VF Corp.’s ratings on three other pending securities unchanged pending review of final documentation. They include:

  • A3 for senior unsecured ratings.
  • (P) Baa1 for subordinated shelf rating.
  • (P) Baa2 for preferred stock shelf rating.
  • P-2 short term commercial paper rating.

“The transaction is a credit positive because it will extend the company’s debt maturity profile and provide for a natural currency hedge for operations in Europe,” stated Moody’s analyst Mike Zuccaro.

Moody’s said VF’s A3 senior unsecured rating is supported by its significant scale as one of the largest apparel companies in the world, with LTM revenues approaching $12.4 billion.

“The ratings also reflect its unmatched diversification in the industry by product and distribution channel,” Moody’s wrote. “The ratings are also supported by its ownership of a number of brands with strong market positions in their segments such as The North Face, Vans, Timberland, Wrangler and Lee and the company’s successful long term track record of driving sustainable organic revenue growth across its portfolio of brands.”

VF Corp.’s shares have fallen about 23 percent since October 23, when the company reported growth at its Outdoor & Action Sports coalition slipped to 5 percent in the third quarter ended October 3 from their 9 percent pace in the fiscal second quarter. The coalition has since reported quarterly sales changes of -3, 2 and 2 percent.

Moody’s said it could upgrade its ratings if VF Corp. continues to demonstrate sustained organic revenue growth across its portfolio of brands, as well as further increasing the portion of its revenues earned outside the United States while maintaining conservative financial policies. Specifically, ratings could be upgraded if debt/EBITDA was sustained below 1.5 times and retained cash flow/net debt was sustained in the low 40 percent range.

Conversely, ratings could be downgraded if debt/EBITDA was sustained above 2 times, interest coverage below 6.5 times and RCF/net debt below 30 percent.