S&P boosts Lockheed rating

By Marjorie Censer / May 23, 2018 at 11:04 AM

Standard & Poor's Global Ratings this week changed its outlook on Lockheed Martin to positive from stable.

"Although we expect Lockheed's credit measures to weaken in 2018 due to a voluntary pension contribution, the outlook revision reflects our belief that the benefits from U.S. tax reform, increasing defense budgets, and a moderation of the company's financial policy could cause its [funds from operations]-to-debt ratio to increase above our upgrade trigger of 40 percent in 2019," S&P said in a statement.

S&P added that it could raise its ratings on the company if the contractor's cash flows improve as a result of lower taxes and the absence of required pension contributions. However, it might revise the outlook back to stable if Lockheed doesn't reduce its share repurchases or pay down upcoming debt maturities.