S&P rates UPS notes AA-

Standard & Poor's said it assigned an AA- rating to United Parcel Service Inc.'s proposed senior notes offering, consisting of a tranche maturing in 2021 and a tranche maturing in 2040.

The proceeds will be used to make early contributions to some of its domestic pension plans, the agency said.

Like many companies, UPS experienced a significant increase in unfunded post-retirement obligations at the end of 2008, S&P said.

This, coupled with decreased demand related to the global economic downturn, caused credit metrics to deteriorate last year, the agency said.

Since then, however, its credit metrics have begun to improve, reflecting the slowly recovering economy, benefits from yield initiatives and efficiency improvement measures and a scaling-back of shareholder rewards, S&P said.

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