TEXT - S&P rates Raytheon proposed notes 'A-'
Nov 27 - Standard & Poor's Ratings Services today assigned its 'A-' rating to Raytheon Co.'s proposed issuance of unsecured notes. The company has not stated what amount of new notes it plans to issue, but it will use the proceeds to redeem its $575 million 1.4% notes due 2014 and $400 million 1.625% notes due 2015. Raytheon plans to issue the notes as a drawdown from its existing shelf registration. Our ratings on Raytheon reflect our expectations that cash generation will remain solid despite revenues and margins coming under pressure over the next few years because of likely cuts to U.S. defense spending. The ratings also reflect our belief that management will moderate share repurchases, if necessary, to preserve credit quality. The company's position as a leading U.S. defense contractor, with strengths in defense electronics, a broad program base, a relatively high proportion of foreign sales, and above-average profitability support our "strong" business risk profile. We assess the company's financial risk profile as "modest," reflecting solid cash generation, "strong" liquidity, credit measures that are generally appropriate for the rating (funds from operations to debt net of cash in excess of $1 billion is about 45%), and management's conservative financial policy. RELATED CRITERIA AND RESEARCH -- Business Risk/Financial Risk Matrix Expanded, Sept. 18, 2012 -- Liquidity Descriptors For Global Corporate Issuers, Sept. 28, 2011 -- Key Credit Factors: Methodology And Assumptions On Risks In The Aerospace And Defense Industries, June 24, 2009 -- 2008 Corporate Criteria: Analytical Methodology, April 15, 2008 RATINGS LIST Raytheon Co. Corporate Credit Rating A-/Stable/A-2 New Rating Raytheon Co. Sr unsecured notes A-
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