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S&P Assigns AA+ Rating to Denso Corp.

3 June 1998

S&P Assigns AA+ Rating to Denso Corp.; Outlook Stable

    TOKYO, June 3 -- Standard & Poor's today assigned its double-
'A'-plus long-term corporate credit rating to Denso Corp. and a preliminary
double-'A'-plus rating to the company's Y100 billion shelf registration
program for the Japanese market. At the same time, Standard & Poor's affirmed
the 'A-1'-plus short-term ratings of Denso and subsidiary Denso International
America Inc. The outlook on the long-term ratings is stable.
    The ratings reflect Denso's demonstrated ability to generate stable
profits and cash flow by means of its strong competitive position as one of
the largest makers of auto parts in the world. The ratings also reflect the
company's very conservative financial profile, characterized by low debt
levels and ample liquidity.
    Denso is a leading manufacturer of automotive components, and enjoys
significant economies of scale in a highly fragmented industry. The company is
23% owned by Toyota Motor Corp. (triple-'A'/Stable/'A-1'-plus) and is the core
supplier of auto parts to the Toyota group. Denso benefits from its stable,
long-term relationship with Toyota, which also implies dominant market shares
for many of the products it manufactures in Japan. Nonetheless, Denso has a
relatively diversified customer mix, and has been expanding sales to other
major automakers both in Japan and the U.S.
    Despite pressures on earnings brought about by the current downturn in the
Japanese automobile industry, Denso has maintained strong profitability.
Pretax interest coverage stood at about 40 times in fiscal 1997 (ended March
31, 1998). Rising capital expenditures continue to be covered by internally
generated cash flow. Denso maintains very low debt levels, with total debt to
capital of 7%. In addition, the company holds cash and marketable securities
in the amount of about Y490 billion -- over 6 times total debt.
    OUTLOOK: STABLE
    While profitability will remain under pressure from difficult industry
conditions, Denso is expected to maintain its conservative financial profile,
Standard & Poor's said. -- CreditWire.