Global diversified technology and manufacturing company
Honeywell International Inc.
), shares dropped almost 1% yesterday on close, following the
initiation of public offering of senior unsecured notes valued at
approximately $1 billion.
The notes offered by Honeywell include a combination of
floating and fixed rate notes. The fixed notes worth $300 million
have a coupon of 3.35% and are due 2023, while the two-year
floating rate senior notes worth $700 million are due on
The company intends to use the proceeds for general corporate
purpose. Apart from this, rating agency Fitch, expects the
company to use the funds to meet its liquidity requirement, ahead
of the scheduled maturity of $600 million 3.875% notes due Feb
Fitch anticipates assigning an 'A' rating, with a stable
outlook to Honeywell's senior unsecured and unsubordinated debt.
The rating agency has cited the company's strong operating
performance, leading market position, diverse business portfolio,
high liquidity and consistent cash flow as some of the reasons
for this outlook.
During the nine months ended Sep 30, 2013, Honeywell generated
net cash of $2.7 billion from its operating activities, up 23%
compared with the year-ago period. Moreover, the company had
solid $5.5 billion cash on its balance sheet as on Sep 30,
However, Fitch may give Honeywell a negative rating if the
company's margins shrink, or liquidity position deteriorates, or
if its contingent liabilities increase. Moreover, a further rise
in the company's leverage position due to large acquisitions or
other discretionary spending, might also prompt Fitch to revise
the current rating and outlook.
Honeywell currently has a Zacks Rank #3 (Buy). Other stocks
that look promising and are worth a look include,
Hutchison Whampoa Ltd
Tyco International Ltd
). All these stocks carry a Zacks Rank #2 (Buy).
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