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Moody's raises Halliburton's rating by two notches

NEW YORK, May 1 (Reuters) - Moody’s Investors Service on Tuesday raised Halliburton Co.’s debt rating, citing a strong oil services industry, healthy cash flow and a growth strategy that will likely make the company more competitive.

The upgrade also reflects Halliburton’s completion last month of the split-off of KBR Inc., a lower-margin engineering and construction firm, Moody’s said in a statement.

Moody's raised Halliburton's HAL.N senior long-term debt rating by two notches to "A2," the sixth-highest investment grade rating, from "Baa1." The outlook is stable, meaning another rating change is not expected over the next 12 to 18 months.

Houston, Texas-based Halliburton last month said its first-quarter net profit rose 13 percent, helped by pricing gains and new contracts from customers in international markets. For details see [nN26466722].

The rating upgrade also reflects Halliburton’s strong liquidity, including $2.9 billion of cash following the KBR split-off, and a virtually net debt-free position, Moody’s said.

KBR, the Pentagon’s largest contractor in Iraq, had been a drag on Halliburton’s earnings and has drawn scrutiny from auditors, congressional Democrats and the U.S. Justice Department for the quality and pricing of its work for the U.S. Army.

Spreads on Halliburton’s 5.5 percent notes due 2010 widened on Tuesday to 61 basis points over Treasuries, out from 58 basis points on April 27, their previous significant trade, according to MarketAxess.

((Reporting by Dena Aubin; editing by Andrea Ricci, Reuters Messaging:; +1-646-223-6325)) Keywords: HALLIBURTON RATING/MOODYS

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