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S&P upgrades CNH Industrial


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S&P upgrades CNH Industrial

S&P Global Ratings raised CNH Industrial NV's long-term issuer credit rating to BBB from BBB- with a stable outlook.

"CNHI maintains a relatively conservative financial policy, including maintaining an ample cash balance and limited shareholder distributions, which enabled the company to maintain robust credit metrics during the 2013-2016 downturn in agricultural equipment, its most important end market," S&P said. The rating agency added that it expects the company to become even stronger in a positive business environment.

S&P also cited the company's improving operating performance, increased revenues in the first half, expanding EBITDA margin, as well as high tractor demand in CNHI's agricultural equipment segment, the main driver of the company's operating performance.

The debt watcher noted that China's tariffs on U.S. soybeans might weigh on U.S. farmers' investment sentiment over the next 12 months, but expects that production would be broadly rerouted to other countries.

The outlook reflects S&P's expectation that CHNI will sustain debt-to-EBITDA below 2x and funds from operations-to-debt ratio above 45% over the next 24 months and continue to improve its operating performance through 2018 despite trade tariff threats.

This S&P Global Market Intelligence news article may contain information about credit ratings issued by S&P Global Ratings, a separately managed division of S&P Global. Descriptions in this news article were not prepared by S&P Global Ratings. The original S&P Global Ratings documents referred to in this news brief can be found here.