Fitch: Tyco Electronics outlook positive

Fitch Ratings said it affirmed the BBB issuer default ratings and F2 short-term issuer default ratings of Tyco Electronics Ltd. and Tyco Electronics Group SA as well as Tyco Electronics Group's senior unsecured revolving credit facility and senior unsecured notes at BBB and commercial paper program at F2.

The outlook was revised to positive from stable.

The agency said the positive outlook reflects its increased confidence that Tyco Electronics' operating performance will exceed original expectations in fiscal 2010, that the company will be able to maintain operating margins in the mid-teens through the intermediate term and that Tyco Electronics' credit protection measures will strengthen meaningfully in fiscal 2010 due to improving profitability and modest additional debt reduction. Fitch estimates total leverage will be below 1.5 times.

The ratings continue to reflect the company's conservative financial policies; industry-leading positions in large and relatively fragmented markets; relatively diversified product, customer and end-market portfolios; and balanced geographic manufacturing footprint, Fitch said.

Ratings concerns center on the cyclical demand patterns associated with electronics components, the company's ability to mitigate ongoing average selling price pressures in the majority of its end markets with efficiency initiatives and new product introductions beyond the near term and the company's use of cash for share repurchases and acquisitions, Fitch said.

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