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Honeywell to Discuss New $5 Billion Term Loan With Banks

Honeywell Is Said to Discuss New $5 Billion Term Loan With Banks

(Bloomberg) -- Honeywell International Inc. is in discussions with banks to raise a new $5 billion term loan, according to people familiar with the matter.

The new loan is expected to have a maturity of two years, the people said, asking not to be named because the discussions are private. A representative for Honeywell confirmed the discussions, but did not give specific details.

“We are taking this and other proactive steps to further strengthen our resilience in the current environment,” the company said in an emailed statement.

A representative for Citigroup Inc., which is the agent bank on the new loan, declined to comment.

Dozens of investment-grade companies are tapping existing credit facilities or asking banks for additional liquidity in the form of new revolvers or term loans amid broad-based volatility due to the spreading coronavirus. Some have done so as an alternative source of short-term financing due to rising costs in the commercial paper market.

Honeywell said in its statement to Bloomberg that it still had access to the commercial paper market, and that its pension was overfunded.

Bloomberg Intelligence analyst Karen Ubelhart said Monday that the company was well-positioned to weather a global recession because of its diverse markets and strong operations. Honeywell also has more than $10 billion of cash on balance sheet, Ubelhart added.

Honeywell is a relatively high-quality company, with credit ratings that sit five steps above junk by Moody’s Investors Service, S&P Global Ratings and Fitch Ratings. Credit-default swaps insuring the company’s debt for five years have jumped to 43 basis points as of Monday from 26 basis points at the beginning of March amid a sell-off in credit, according to ICE Data Services.

The U.S. industrial conglomerate, based in Charlotte, North Carolina, released a disappointing sales forecast in January before the Covid-19 virus hit as an industrial slowdown crimped revenue growth. Honeywell’s aerospace unit sales had already been hurt by the production halt of Boeing Co.’s grounded 737 Max.

“As the coronavirus halts global growth, Honeywell faces pressure in aerospace after-market sales, which represent 41% of its largest and most profitable segment,” Ubelhart said.

©2020 Bloomberg L.P.