TYC still not getting any respect,
=DJ Rating Agencies Keep Pressure On Tyco Despite CIT IPO
By Christine Richard Of DOW JONES NEWSWIRES
New York (Dow Jones)-The major rating agencies continue to have Tyco International (TYC) in their sights for a possible downgrade despite the initial public offering of its CIT Group (CIT) financing unit Monday.
Standard & Poor's said Tuesday it would keep Tyco's triple-B-minus rating - its lowest investment-grade rating - on review for possible downgrade.
S&P called the IPO "an important step in strengthening Tyco's liquidity" but said the company still faces challenges in meeting an approximately $3 billion gap between expected available cash, including cash raised through the IPO, and obligations coming due in the next 18 months.
CIT's IPO proceeds totaled $4.6 billion.
S&P said Tyco's outlook will brighten if it can restore bank line availability, sell additional assets and access the public capital markets.
Moody's Investors Service also said Tuesday it was continuing to review Tyco International Group S.A.'s Ba2 senior debt rating for a possible downgrade.
Moody's rating is two notches below S&P's rating - in junk territory.
Calling the IPO a "positive development," Moody's also noted, however, that the company faces substantial debt maturities in the next 18 months.
Going forward, Moody's said it would be considering "any emerging issues related to the company's internal investigation, as well as it progress in identifying new management leadership."
Tyco's former chief executive officer L. Dennis Kozlowski resigned amid charges of tax evasion.
The company also faces Securities and Exchange Commission scrutiny.
The CIT IPO is "a positive development from a liquidity standpoint but I think the rating agencies are erring on the side of caution," said Steve Altman, credit analyst at Commerzbank Securities.
Altman says Tyco needs to restore investor confidence further to obtain access to the capital markets.
"It's an incremental process and they are closer today than they were yesterday," Altman said.
Tyco debt was little changed following the completion of the offering.
Tyco 5.8% notes maturing in 2006 were quoted late Tuesday at around 78 cents on the dollar. That's little changed from Monday but off lows seen in recent weeks of around 69 to 70 cents on the dollar.
On Monday, S&P raised CIT's ratings long-term rating on Monday to single-A from triple-B-plus and its short-term rating to A-1 from A-2.
S&P cited the "successful delinkage from Tyco" for its action.
Moody's assigns CIT a long term senior unsecured of rating of A2, and short-term rating of P-1. -By Christine Richard; Dow Jones Newswires, 201 938-2189; christine.richard@dowjones.com
(END) DOW JONES NEWS 07-02-02
05:10 PM- - 05 10 PM EDT 07-02-02 |
