S&P pulls Hitachi from watch

S&P said it affirmed its A long-term issuer and issue credit ratings on Hitachi Ltd. and overseas subsidiaries and removed the ratings from CreditWatch with negative implications. The agency placed them on CreditWatch on April 1. The outlook is negative

The rating actions follow Hitachi completing its acquisition of GlobalLogic Inc. “The Japan-based diversified capital goods and IT service company can ease the temporary financial burden of the roughly $9.6 billion (just over ¥1 trillion) deal because it has sped up asset sales. In addition, we expect Hitachi to generate strong sales and profit in the next one to two years. This is because of robust demand and enhanced cost management in its core IT services and social infrastructure businesses,” S&P said in a press release.

The agency said it sees at least a one-in-three chance that Hitachi’s financial ratios may not recover fully to levels commensurate with the A rating if it cannot sell enough assets in a short period to ease the financial burden of the acquisition.

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