S&P lowers Cenovus to negative

Standard & Poor’s said it revised the outlook on Cenovus Energy Inc. to negative from stable.

The agency also said it affirmed the ratings on Cenovus, including its BBB+ long-term corporate credit rating.

The outlook revision reflects a view that the company’s overall credit profile could deteriorate with protracted low crude oil prices, S&P said.

If this occurs, the agency said the company’s operating efficiency profile, profitability and cash flow metrics could weaken below the BBB+ rating profile.

The ratings also consider the company’s historically strong operating efficiency and profitability profiles, which are enhanced by its consistent track record of maintaining competitively low operating costs, S&P said.

S&P lowers RBS notes

Standard & Poor’s said it corrected the issue ratings on two senior unsecured notes of the Royal Bank of Scotland Group plc by lowering them to BBB- from BBB+.

The agency said it inadvertently failed to lower the ratings on these issues Feb. 3 when it took a similar rating action on the bank.

The issues include its $700 million 1.875% notes due March 31, 2017 and $300 million floating-rate notes due March 31, 2017.

Fitch rates Affiliated Managers notes BBB

Fitch Ratings said it expects to assign a BBB rating to Affiliated Managers Group Inc.’s $350 million senior unsecured notes due Aug. 1, 2025.

The company has a long-term issuer default rating of BBB, senior bank credit facility rating of BBB and senior unsecured debt rating of BBB.

AMG Capital Trust II has a trust preferred securities rating of BB.

The outlook is positive.

The notes will rank pari passu with the company’s existing and future senior unsecured debt, Fitch said.

The proceeds will be used to reduce a portion of revolver borrowings and for general corporate purposes, the agency said.

Given that the proceeds from the new issuance will be used to repay outstanding borrowings under the revolving credit facility, Fitch said it does not believe there will be a material impact on the company’s leverage levels as a result of the issuance.

The rating on the notes is equalized with the company’s other senior unsecured debt, which is aligned with its BBB long-term issuer default rating.

S&P rates Grand City notes BB

Standard & Poor’s said it assigned a BB long-term issue rating to the proposed perpetual, optionally deferrable subordinated hybrid notes to be issued by Grand City Properties SA.

The completion and size of the transaction will be subject to market conditions, but it is anticipates that it will be benchmark size, S&P said.

The proceeds will be used to fund the company’s growth strategy, the agency said.

The BB rating on the proposed notes is based on a two-notch deduction from the company’s BBB- issuer credit rating, S&P said.

Fitch rates Lockheed Martin notes A-

Fitch Ratings said it expects to assign an A- rating to Lockheed Martin Corp.’s proposed senior unsecured notes.

The company plans to issue up to $2 billion of notes with various long-term maturities, Fitch said.

The notes will rank equally with the company’s existing senior unsecured notes, the agency said, and the proceeds will be used for general corporate purposes, which could include repayment of existing debt.

The company has an issuer default rating of A-, senior unsecured debt rating of A-, bank facility rating of A-, short-term issuer default rating of F2 and commercial-paper programs rating of F2.

The outlook is stable.

The ratings are supported by the company’s position as a leading defense contractor, solid cash generation and liquidity, financial flexibility and increasing international sales, Fitch said.

Concerns include the company’s cash deployment strategy focused on returning almost all free cash flow to shareholders over the next several years, continued uncertainty in defense spending outlook and rising competitive pressures in parts of the space sector, the agency said.

Moody’s rates Lockheed Martin notes Baa1

Moody's Investors Service said it assigned a Baa1 rating to the proposed new issuance of senior unsecured notes by Lockheed Martin Corp.

Roughly half of the net proceeds will be used to pre-fund $962 million of long-term debt maturities coming due in 2016 and the balance will be used for general corporate purposes.

The issuance does not affect the company's existing Baa1 long-term rating or the positive rating outlook.

Moody’s said Lockheed Martin's Baa1 rating is broadly supported by the company's significant scale as the world's largest defense contractor, with sales of about $46 billion and a backlog in excess of $80 billion which affords good revenue visibility, as well as its strong market position as the incumbent on a number of critical defense programs.

"We expect modestly declining organic sales will stabilize in 2015 at about $44 billion and grow 3%-5% in 2016, as near-term revenues continue to be somewhat pressured by persistent budgetary constraints for Lockheed Martin's principal end customer, the U.S. Department of Defense (DoD)," Russell Solomon, Moody's senior vice president and lead analyst for the company, said in a news release.

"Even so, we expect this pressure will be less severe than for the broader defense market given Lockheed Martin's prime position on the sizeable and now nicely growing F-35 program, the risk profile for which we believe has dramatically improved as partially evidenced by the proposed near-30% increase in the DoD fiscal 2016 budgetary request to more than $11 billion for the advanced stealth fighter jets," Solomon added in the release.

While it remains exposed to further quantity reductions and affordability initiatives, Moody’s said the program now seems reasonably assured to continue, and at accelerating unit delivery levels, with renewed interest from global allies even as cost reduction initiatives are increasingly scrutinized.

S&P: Lockheed Martin notes A-

Standard & Poor’s said it affirmed the A-/A-2 corporate credit rating on Lockheed Martin Corp.

The agency also said it assigned an A- rating to the company’s proposed issuance of $1.5 billion to $2 billion in senior unsecured notes in three tranches with 10-, 20-, and 30-year maturities.

The outlook is stable.

The ratings reflect a belief that the proposed debt issuance does not result in a material change in Lockheed Martin’s financial profile or management’s financial policy, S&P said.

The company is planning to issue $1.5 billion to $2 billion of unsecured notes to prefund about $1 billion of debt due in 2016, the agency said, with the remainder for general corporate purposes.

Credit ratios in 2014 were worse than expectations, mostly because of a $2 billion increase in the company’s pension liability and higher-than-expected current taxes, S&P said.

Although revenues and earnings will likely be down modestly in 2015 because of pressures on the U.S. defense budget, the agency said it believes the company will continue to generate solid free cash flow.

Fitch rates Verizon notes A-

Fitch Ratings has assigned an 'A-' rating to Verizon Communications Inc.’s senior unsecured exchange notes due 2036, 2048 and 2055.

Verizon commenced an offer to exchange existing senior unsecured debt that it, or its GTE Corp. subsidiary, had previously issued for the new Verizon notes.

In the case of the GTE debentures, cash will comprise part of the total exchange price, Fitch said.

The exchange will reduce significant maturity towers in 2023 and 2043, as well as lower the average cost of debt, the agency said.

The company’s current issuer default rating is A- with a stable outlook.

The February 2014 acquisition of the remaining Verizon Wireless stake pressured Verizon’s recent credit metrics, pushing pro forma leverage at closing to about 2.6x, Fitch said.

The agency said it expects Verizon to materially reduce debt over the next few years, which supports the commitment of Verizon’s management to de-lever.

Verizon’s strong competitive position, evidenced by industry-low churn rates on average, high margins and the most developed LTE network in the United States supports the ratings.

S&P rates Verizon notes BBB+

Standard & Poor’s said it assigned a BBB+ rating to a proposed series of senior unsecured notes to be issued by Verizon Communications Inc.

Verizon plans to issue up to $12.5 billion in new notes in exchange for existing debt, S&P said.

The existing debt, which is subject to the exchange totals, is roughly$30.6 billion, consisting of seven separate issues with maturities ranging from 2023 through 2043, the agency said.

The proposed notes will be issued in three tranches consisting of up to $3 billion of senior notes due 2036, which would be exchanged for the existing 5.15% senior notes due 2023; up to $4.5 billion of senior notes due 2048, which would be exchanged for existing debt due between 2028 and 2038; and up to $5 billion of senior notes due 2055, which would be exchanged for the existing 6.55% senior notes due 2043.

As a result of the proposed exchange, S&P said it expects Verizon to modestly reduce cash interest expense and extend certain debt maturities.

The company’s BBB+ corporate credit rating and stable outlook are unchanged, the agency said.

S&P assigns A-2 rating to Diamond Offshore

Standard & Poor’s said it assigned an A-2 short-term rating to Diamond Offshore Drilling Inc.

The long-term corporate credit and unsecured debt ratings on the company are unchanged at A-.

The outlook is negative.

The short-term rating reflects an expectation that Diamond Offshore will maintain same-day back-up facilities to cover 100% of all commercial-paper maturities as they come due, S&P said.

The ratings reflect the company’s strong business risk profile, significant financial risk profile and strong liquidity, S&P said.

The ratings also consider the application of the agency’s group methodology criteria, under which Diamond is assessed as a moderately strategic entity of Loews Corp., the agency said.

Diamond is 52% owned by Loews and the agency said it believes it is important to the group’s long-term strategy and has the commitment of senior group management.

S&P said it also believes that in periods of stress, the group would provide support to Diamond if needed.

Moody’s gives A2 to Mitsubishi UFJ Financial

Moody's Japan K.K. said it assigned an A2 long-term issuer rating and a Prime-1 short-term issuer rating to the financial holding company, Mitsubishi UFJ Financial Group, Inc. (MUFG).

The outlook is stable.

MUFG's A2 intrinsic financial strength is mainly driven by the consolidated financial strength of its lead banking subsidiary, Bank of Tokyo-Mitsubishi UFJ, Ltd. (BTMU, A1 stable). BTMU accounted for 77% of group assets at end-September 2014, while MUFG's other banking subsidiary, Mitsubishi UFJ Trust and Banking Corp. (MUTB, A1 stable) accounted for 13% of group assets over the same period.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.