Fitch upgrades SPX debt to BB+

Fitch Ratings said it upgraded SPX Corp.'s senior unsecured debt to BB+ from BB, affirmed its issuer default rating and senior secured bank debt at BB+ and revised the outlook to positive from stable.

The agency said the outlook revision reflects the substantial completion of SPX's realignment of its business portfolio, ongoing improvements in operating processes and performance and expectations for increasing free cash flow, even when excluding the impact of the redemption of liquid yield option notes (LYONs) in 2006. The debt-to-EBITDA ratio was 1.7x at Dec. 31.

The upgrade of the senior unsecured debt rating reflects the positive trends noted above, combined with a reduction in leverage during the past two years that supports improved recovery prospects across SPX's entire debt structure, the agency said. Senior unsecured notes total $50 million or less, with the majority of SPX's debt consisting of bank debt used to redeem the LYONs.

Rating concerns include the company's exposure to cyclical end-markets, high raw material prices and SPX's long-term competitive position, which will be dependent on its ongoing efforts to improve productivity, cost controls, new product introductions and organizational development, Fitch said.

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