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Moody's rates Lear notes
Moody's Investors Service said it assigned a Baa3 rating to the new $400 million 10-year unsecured notes to be issued by Lear Corp. Proceeds of the notes will partially pre-fund an existing $600 million bond maturity in May 2005.
The newly assigned Baa3 rating is at the same level as that of Lear's senior unsecured debt, which was upgraded to investment-grade status in May 2004.
The rating reflects Moody's expectation that: 1) Lear will continue to generate annual free cash flow of about $300 million; 2) the volume of new business awards coming on stream in the next few years will remain healthy; 3) the company's customer base and geographic position will remain well diversified; and, 4) its fixed-cost structure will remain low. As a result, the company's financial flexibility and debt protection measures should continue to improve.
Moody's said the ratings also take into account the leverage currently employed in Lear's capital structure, which will temporarily increase given the pre-funding nature of the transaction, as well as the cyclical nature and ongoing pricing pressure of the automotive markets.
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