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Moody's Upgrades Rating on $2.2B of Corning Debt

Post Time:Sep 13,2011Classify:Industry NewsView:243

NEW YORK — Moody's Investors Service said Monday it has upgraded its rating for Corning Inc.'s senior unsecured debt to A3 from Baa1 and also raised ratings on Corning's related securities offerings.

The ratings action affects about $2.2 billion of the specialty glass maker's long-term debt, Moody's said in a news release.

Moody's said the upgrade reflects a balance between two significant factors: Corning's dependence on industries that are cyclical and sensitive to technology, such as consumer electronics, and its financial policies and strong balance sheet providing flexibility. Corning may post slower growth in its business of making large glass screens, but should also have reduced capital expenses over time and bigger cash flow, the rating agency said.

Moody's said its outlook for Corning is stable, anticipating continued profits in operations and a strong cash position. An additional rating upgrade or positive outlook is unlikely in the near future because of the volatility built into the company's business, it said.

Corning reported last Thursday that its third-quarter sales of glass for LCD televisions will be lower than it originally forecast. Use of the glass remains low as the industry prepares for retail demand for the TVs to slow in the second half of this year, the company said. Sales of TVs and other discretionary, big-ticket items tend to falter when consumers are feeling less confident about their jobs and their wallets.

Moody's noted that growth in the LCD television market "may be less robust than earlier expectations." In a similar way, the agency said, sales of PCs and notebook computers are being reduced by shifts in demand toward tablets — which have smaller glass display areas.

While demand for glass for handheld electronic devices like smartphones should continue to increase, that demand is unlikely to completely compensate for the slowed pace in the other electronics markets, Moody's said.

Shares of the Corning, N.Y.-based company declined 24 cents, or 1.8 percent, to $13.34 in afternoon trading Monday as the broader market declined.

Source: http://asia.wsj.com/home-pageAuthor: shangyi

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