Consumer and professional audio equipment maker Harman International got some good news from Standard & Poor’s. The company’s corporate credit rating has been raised – putting it just one notch below investment grade.
S&P raised Harman’s corporate credit rating to “BB+” from “BB,” with a “positive” outlook. The ratings agency also raised the issue rating on the company’s senior unsecured notes to “BB” from “BB-.” S&P noted that Harman’s corporate credit rating could rise to investment grade within the next year.
In its statement, S&P commented that given the company’s sizable backlog of new automotive business to be launched in the next several years, Harman will be able to generate double-digit margins and free cash flow in the year ahead despite significant economic uncertainty. S&P added that the company will be able to comfortably manage its $400 million October 2012 debt maturity with cash on hand, improving its liquidity position.
“The S&P upgrade further validates Harman’s growth strategy and relentless cost focus that has delivered eight consecutive quarters of top and bottom line growth” said Harman Chairman, President and CEO Dinesh Paliwal. “The company’s $14.5 billion order backlog in infotainment and premium branded audio is clear evidence of our technology and market leadership and strong presence in high-growth emerging markets.”