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Fitch rates Raytheon notes A-
Fitch Ratings said it expects to rate Raytheon Co.'s $1 billion of new notes A-.
The outlook is stable.
Proceeds will be used mainly for discretionary pension contributions, but also for general corporate purposes.
Ratings reflect the company's competitive position in the defense industry, high levels of U.S. defense spending, international revenue growth and a large backlog, the agency said.
The company's healthy credit metrics, financial flexibility and liquidity also support the ratings, the agency noted.
Concerns center on uncertainty about core U.S. defense spending beyond fiscal 2012, the pension deficit, large share repurchases and to a lesser extent some pending legal issues, Fitch said.
For the 12 months ended Oct. 2, gross debt to EBITDA was 1.1 times compared with 1.2x in 2010 and 0.7x in 2009. Leverage increased in 2010 because a large debt issuance raised outstanding debt by roughly 50%, the agency said.
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