Fitch lifts Itochu from junk

Fitch Ratings said it upgraded Itochu Corp.'s senior unsecured foreign currency and local currency ratings to BBB- from BB+.

The outlook is positive.

Fitch said the upgrade reflects the consistent improvement in Itochu's financial profile and credit metrics, especially leverage. Net debt to equity has improved to 3.8x at the end of March 2005 from 4.8x a year prior, thanks to a strong operating performance and consistent debt reduction.

The positive outlook is based on the company's strong performance, driven by persistently high commodity prices, the relatively stable global economic environment and Japan's steady economic recovery, the agency said.

Fitch noted, however, that Itochu's ratings have been hindered by its relatively weak financial profile. Not only does the company lag behind its peers in business and financial restructuring by several years, it has also increased its investments amid the restructuring, together representing a faster and more aggressive expansion than its competitors.

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