Standard & Poor's Rating Services Affirms Credit Ratings for Ericsson; Revises Outlook to Stable-Reuters
Reuters reported that Standard & Poor's Rating Services (S&P) has revised outlook on Ericsson to negative from stable. At the same time, S&P affirmed 'BBB+/A-2' long- and short-term corporate credit ratings on the Company. The outlook revision reflects S&P's assumption that profitability improvement in 2013-2014 could be difficult to achieve, and uncertainty about assets of the 50%-owned equity-accounted joint venture ST-Ericsson. The corporate credit rating reflects S&P's assessment of the Company's business risk profile as "satisfactory", including assessment of its management and governance as "satisfactory", and its financial risk profile as "modest". The short-term rating is 'A-2'. S&P assess the Company's liquidity as "strong," as defined in S&P's criteria. The negative outlook reflects the possibility of a one-notch downgrade in the next two years if profitability remained at current levels in 2013 or if Ericsson's balance sheet and net financial cash position weakened as a result of a transaction with ST-Ericsson assets, aggressive acquisition activities, or shareholder distributions that materially exceeded free operating cash flow. S&P could revise outlook to stable if the Group's margin gradually improved and if any cash burn at ST-Ericsson remained comfortably within Ericsson's liquidity means.
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