S&P upgrades Hospira

Standard & Poor's said it raised Hospira Inc.'s corporate credit and senior unsecured debt ratings to BBB+ from BBB. The outlook is stable.

The agency said the upgrade reflects the company's successful, largely completed separation from Abbott Laboratories Inc., which spun off Hospira in April 2004. Hospira has grown revenue and cash flow over the two-year transition period, while concurrently establishing an independent infrastructure, introducing several new products and building a product pipeline.

S&P said the ratings on Hospira Inc. reflect the company's operating strength as a large, established medical products manufacturer with a broad portfolio of noncyclical and entrenched products that generate relatively stable and sustainable cash flow.

As a standalone company, Hospira has incurred additional expenses, but financial measures are strong for the revised rating, the agency said. Operating income to sales (before depreciation) was 23% for 2005, funds from operations to total debt over 50%, EBITDA interest coverage was 17% and total lease-adjusted debt to EBITDA was 1.6x at the end of 2005.

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