Moody's upgrades Raytheon

Moody's Investors Service said it upgraded Raytheon Co.'s long-term senior debt to Baa2 from Baa3 and its short-term rating to Prime-2 from Prime-3. The outlook is stable.

The agency said the upgrade was prompted by the company's improved financial profile, which Moody's believes is sustainable due to continued high levels of defense spending, demand in the company's aviation segment as well as the reduction in uncertainty surrounding contingent liabilities and material reduction in debt seen since 2002.

Supporting the ratings upgrade is a reduction in contingent liabilities and litigation risk as most outstanding legal matters and Securities and Exchange Commission investigations are settled or close to settlement, Moody's said, which reduces uncertainties associated with contingent obligations and event risk.

The agency estimated that debt maturities in the second quarter of 2006 and first quarter of 2007 could be met with cash on hand and free cash flow generation.

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