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Navistar International Ratings Raised by S&P; New Issues Rated

26 January 1998

Navistar International Ratings Raised by S&P; New Issues Rated

    NEW YORK, Jan. 26 -- Standard & Poor's today raised its
ratings of Navistar International Corp. and units as listed below, reflecting
improving business and financial profiles.
    In addition, Standard & Poor's assigned its double-'B'-plus rating to the
company's $100 million senior notes due 2003 and its double-'B'-minus rating
to the company's $250 million senior subordinated notes due 2008. Both issues
are privately placed under Rule 144A.
    The outlook is positive.
    About $1.3 billion of debt is outstanding.
    The firm enjoys defensible business positions in volatile markets, with
rising efficiencies, but competitive challenges remain substantial.  The
financial profile, while strengthening, continues to be subpar.  Unfunded
retiree medical obligations and pension liabilities remain material, although
the company has made significant progress recently in reducing them.
    The Chicago, Ill.-based firm is a major manufacturer of medium- and heavy-
duty trucks, school bus chassis, and mid-range diesel engines.  Demand for the
company's trucks can vary sharply, and current efforts to reduce fixed costs
will be very important to make internal cash generation more predictable going
forward. Revenues from buses, diesel engines, and spare parts are much more
stable and command respectable margins.  Longer term, Navistar's profitability
over the business cycle should benefit from an emphasis on increased
flexibility and efficiency in design and manufacturing activities. Union
contracts negotiated in 1997 support cost-cutting initiatives.  Financial
services subsidiaries are steady sources of profitability and cash flows.
    Navistar's balance sheet for manufacturing operations had debt to total
capital in a manageable mid-20% area at Oct. 31, 1997.  However, unfunded
pension and other post-employment benefit obligations remain onerous at about
$1 billion.  Navistar's liquidity is expected to be adequate; substantial
current balance sheet cash is available to meet outlays for current
liabilities, ambitious new product development programs, and capital
expenditures, which will be elevated for the next few years.
    OUTLOOK: POSITIVE
    Navistar is in the midst of extensive product introduction and efficiency
programs, but internal cash generation should support substantial spending
needs.  Over the intermediate term, demonstrated continued strengthening of
the business and financial profiles could result in higher credit quality. --
CreditWire

    RATINGS RAISED
                                     TO           FROM
    Navistar International Corp.
      Corp credit rtg                  BB+            BB
      Pfd stk                          BB-            B+
    Navistar Financial Corp.
      Corp credit rtg                  BB+            BB
      Sr unsecd debt                   BB+            BB
      Sub debt                         BB-            B+
    Navistar International Transportation Corp.
      Corp credit rtg                  BB+            BB
      Sr unsecd debt                   BB+            BB

    RATINGS ASSIGNED
    Navistar International Corp.
      $100 mil sr nts (Rule 144A) due 2003                 BB+
      $250 mil sr sub nts (Rule 144A) due 2008             BB-

 SOURCE  Standard & Poor's CreditWire