Standard and Poor's Upgrades Raytheon’s Credit Ratings

Standard and Poor's Upgrades Raytheon’s Credit Ratings
Date posted: 09/10/2008*

Standard & Poor's (S&P) Ratings Services has raised its ratings on Raytheon Co. The provider of financial market intelligence, widely considered the world’s foremost source of credit ratings, has raised the long-term corporate credit rating of Raytheon to 'A-' from 'BBB+', and affirmed a short-term corporate credit rating of 'A-2'.

An S&P report indicates that the upgrade reflects improving credit protection measures, a favorable near-term environment for defense spending, and expectations of a balanced deployment of significant cash flows. Raytheon's “well-positioned defense programs, healthy backlogs, improving performance and cash generation, and commitment to balanced cash deployment should allow the company to maintain a credit profile” consistent with these ratings, S&P reported. Defense operations are “performing generally well and have modestly favorable growth prospects, benefiting from substantial defense spending and a healthy $23 billion multiyear funded backlog ($38 billion total).”

Noting that the company should be somewhat resilient to “U.S. government budget pressures and changing military priorities,” S&P noted that approximately 20 percent of Raytheon’s sales are to foreign governments, providing some geographic diversity.” S&P confirmed a stable outlook for the company.

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