AVCO Financial Services' Rtgs on S&PWatch Developing AVCO Financial Services Inc.NEW YORK--(BUSINESS WIRE)--Standard & Poor's CreditWire 6/4/98-- Standard & Poor's today placed its ratings of Avco
Please [ improve this article] or discuss the issue on the talk page. Inc. and its subsidiaries on Credit Watch with developing implications, meaning the ratings could be raised, lowered, or affirmed af·firm v. af·firmed, af·firm·ing, af·firms v.tr. 1. To declare positively or firmly; maintain to be true. 2. To support or uphold the validity of; confirm. v.intr. (see list below). The CreditWatch placement follows the announcement that Avco's parent, Textron Inc., is reviewing the strategic alternatives for its finance subsidiary, Avco Financial Services. The strategic review includes the evaluation of a sale, spin-off The situation that arises when a parent corporation organizes a subsidiary corporation, to which it transfers a portion of its assets in exchange for all of the subsidiary's capital stock, which is subsequently transferred to the parent corporation's shareholders. , or other disposition. Textron Inc. has hired Goldman Sachs The Goldman Sachs Group, Inc., or simply Goldman Sachs (NYSE: GS) is one of the world's largest global investment banks. Goldman Sachs was founded in 1869, and is headquartered in the Lower Manhattan area of New York City at 85 Broad Street. and JP Morgan Morgan, American family of financiers and philanthropists. Junius Spencer Morgan, 1813–90, b. West Springfield, Mass., prospered at investment banking. as advisors. The sale is targeted to close in the third quarter 1998. The ratings on Avco Financial Services Inc. reflect the continued strong profitability, diverse portfolio of business, and robust capital levels relative to those of consumer finance peers. Avco is a wholly owned subsidiary Wholly Owned Subsidiary A subsidiary whose parent company owns 100% of its common stock. Notes: In other words, the parent company owns the company outright and there are no minority owners. of Textron Inc. (single-'A'-minus senior debt rating), but continues to operate as an independent, stand-alone entity. The company's credit ratings reflect this independence from its parent. In the wake of record bankruptcies nationwide, Avco has had an increase in delinquencies, defaults, and charge-offs. However, unlike many companies in the industry, Avco has successfully expanded internationally, which has somewhat tempered the rate of charge-offs and delinquencies. Despite the increase in delinquencies, returns have remained strong, Standard & Poor's said. ---CreditWire -0-
RATINGS PLACED ON CREDITWATCH DEVELOPING
Avco Financial Services Inc.
Rating
Counterparty credit A/A-1
Senior unsecured debt A
Subordinated debt A-
Commercial paper A-1
Avco Trust PLC
Counterparty credit A/A-1
Senior unsecured A
Commercial paper A-1
Avco Financial Services Canada Ltd.
Counterparty credit A
Senior unsecured A
Avco Financial Services (Asia) Ltd.
Certificate of deposit A
-0- Copyright 1998, Standard & Poor's Rating Services
CONTACT: Lisa J. Archinow CFA, 212/208-1144 (New York)
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