S&P keeps ABB on positive watch

Standard & Poor's said it kept its credit ratings on ABB Ltd. (BB+ corporate credit/B senior unsecured debt) and related entities on CreditWatch with positive implications, where they were placed on Nov. 7, reflecting the continued improvement in ABB's financial profile and capital structure in recent years and its potential to return to a low investment-grade rating on successful completion of the asbestos litigation settlement.

Subsequently, on Monday the U.S. Bankruptcy Court issued an order confirming the revised plan for the reorganization of Combustion Engineering Inc., ABB's U.S. subsidiary, and recommended the affirmation of the plan to the District Court.

S&P said further improvement of ABB's capital structure will be slower, as its divestiture program is largely completed, and further deleveraging will be dependent on free cash flow generation.

The financing and recapitalization measures have relieved the company's former liquidity problems, as the group now has several years of debt maturities covered by freely available cash holdings and undrawn committed credit facilities, and profitability is sound in ABB's core divisions, the agency said.

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