Fitch ups Taylor Wimpey to B

Fitch Ratings said it upgraded Taylor Wimpey plc's long-term issuer default rating to B from B- and senior unsecured rating to B- from CCC. Fitch also said it removed both ratings from rating watch positive. The recovery rating is RR5. The short-term issuer default rating is affirmed at B.

The outlook is stable.

The upgrade reflects the company's improved credit profile, largely due to debt amendments in April that avoided an imminent covenant breach and aligned all bank and bond maturities to 2012, a £510 million equity raising in May that reduced debt levels and evidence of positive free cash flow, Fitch said.

These measures were achieved despite a severe downturn in the company's key United Kingdom and United States housing markets, the agency said.

The ratings are nonetheless constrained by significant concerns that Taylor Wimpey may not be sufficiently cash-generative over the coming three years to repay or support the refinancing, Fitch said, especially if housing market conditions remain weak.

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