Fitch downgrades long-term ratings of Honeywell
CHICAGO --Fitch Ratings has downgraded the long-term ratings of Honeywell International Inc., citing the manufacturer's rising debt, share repurchases and acquisitions in the past 18 months.
Fitch said Monday that it downgraded its issuer default, senior unsecured bank credit facilities and senior unsecured debt ratings to 'A' from 'A+.'
Honeywell's credit measures have been hurt by the company's discretionary spending for "substantial" share repurchases of $3.7 billion in the 18 months that ended June 30, Fitch said. In addition, Honeywell's cash spending for acquisitions during the same period was about $2.2 billion, Fitch said.
As a result, outstanding debt increased by $3.4 billion since the beginning of 2007, the rating agency said.
Fitch left Honeywell's short-term rating unchanged, at F1.
In a statement, the Morristown, N.J.-based Honeywell said its financial strategies are allowing it to grow and increase value to shareholders.
"Honeywell's balanced cash deployment approach has allowed us to maintain a positive credit rating while providing the company with maximum flexibility to drive both business growth through acquisitions and shareowner value with meaningful share repurchases and increased dividend rates," the company said.
Honeywell, which makes airplane and aviation equipment, building controls such as fire prevention equipment and specialty chemical materials, has recently trimmed some of its businesses. It sold part of its aerospace production unit for $1.05 billion in the second quarter.
Fitch said it anticipates that Honeywell will reduce its leverage as it integrates and acknowledged that the company realizes benefits from its acquisitions.
Shares of Honeywell closed Monday at $50.06. 