S&P ups Allison Transmission outlook to stable

Standard & Poor's said it has revised its outlook on Allison Transmission Inc. to stable from negative and affirmed its B corporate credit rating and other ratings.

"The outlook revision reflects its view that Allison will continue to generate modest but still positive free operating cash flow over the next several quarters, even as demand in its core North American commercial-vehicle markets remains sluggish, as we expect," said S&P credit analyst Gregg Lemos Stein.

The agency said it believes prospects for a downgrade caused by diminished liquidity are now more limited, and the more likely scenario is that Allison will gradually reduce leverage through a small improvement in year-over-year EBITDA combined with some debt reduction.

S&P added that it expects cash balances to remain near current levels or rise over time.

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