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Standard & Poor's Rates AlliedSignal's $750 Million Bank Loan 'A'; Ratings Affirmed

26 January 1998

Standard & Poor's Rates AlliedSignal's $750 Million Bank Loan 'A'; Ratings Affirmed

    NEW YORK, Jan. 26 -- Standard & Poor's today assigned its
single-'A' rating to AlliedSignal Inc.'s $750 million five-year credit
agreement, available for multicurrency advances and commercial paper backup,
maturing on June 30, 2002.
    At the same time, Standard & Poor's affirmed its single-'A' corporate
credit and senior unsecured debt ratings, and 'A-1' commercial paper and
short-term corporate credit ratings on the company.
    The outlook is stable.
    The bank facility is rated single-'A', the same as the corporate credit
rating, as it is unsecured and ranks pari passu with other senior obligations.
A group of lenders is led by Citibank N.A. (agent), with pricing based on
LIBOR, prime rate, or competitive bids.  Facility fees and the spread over
LIBOR are tied to long-term debt ratings.
    AlliedSignal's ratings are supported by strong competitive positions in
aerospace, engineered materials, and automotive markets, as well as a good
financial condition characterized by solid profitability and cash flow
generation.  Stability is enhanced by diversity of products and customers,
significant aftermarket sales, and generally rising international revenues.
While improving performance in recent years has resulted from ongoing actions
aimed at higher productivity, there also has been an increased emphasis on
growth through selected acquisitions, new products, and globalization.
    Business prospects are generally favorable, paced by healthy conditions
in commercial aerospace, expected continued strong contributions by the
engineered materials sector and better results from the smaller automotive
segment, and a declining portion of revenues derived from commodity or
cyclical operations.
    Sizable internally generated funds and excess cash-on-hand should be
sufficient to meet the bulk of the firm's large requirements for capital
outlays, working capital, company-funded research and development, tax
payments, and dividends.  The current rating can accommodate moderate-sized
acquisitions using debt and stock repurchases designed to maintain a constant
share base.
    OUTLOOK: STABLE
    Benefits of intensified efforts to improve performance, leading market
positions, and moderate financial policies should maintain credit measures
consistent with current ratings, despite the highly competitive nature and
cyclicality of some markets. -- CreditWire

SOURCE  Standard & Poor's