Printer Friendly

ITT FINANCIAL'S $225 MILLION FLOATING RATE NOTES RATED 'A+' BY FITCH -- FITCH FINANCIAL WIRE --

 NEW YORK, Nov. 9 /PRNewswire/ -- ITT Financial Corp.'s $225 million of floating rate notes are rated "A+" by Fitch. The credit trend is improving. The notes will be issued in two tranches, $100 million that will mature on Jan. 17, 1995 and $125 million to mature on Nov. 17, 1994.
 The rating reflects parent ITT Corp.'s strong, formalized support of the subsidiary, as evidenced by a support agreement. Positive rating factors include the recent sale of a substantial amount of underperforming consumer receivables and a well capitalized balance sheet. Concerns focus primarily on the ultimate success of the company's strategic changes and new business initiatives, as well as asset quality considerations in the home equity and commercial real estate portfolios.
 On June 3, 1993, ITT Financial sold $2.18 billion of consumer small loans to an investor group led by an affiliate of Goldman Sachs & Co. The company purchased a 15 percent equity interest in the portfolio for $29 million, and Household Finance Corp. assumed servicing of the receivables. Proceeds of approximately $1.5 billion from the sale were used primarily to reduce outstanding commercial paper.
 The company recorded a $928 million pretax charge ($612 million after-tax) in fourth-quarter 1992 primarily to writedown the receivables that were sold, resulting in a $518 million net loss for the full year. For the first six months of 1993, net income rebounded to $100.5 million, resulting in an ROA of 1.6 percent, including a $95 million pretax gain on the sale of the receivables and a $75 million pretax loss relating to a debt repurchase offer.
 While the bulk sale of receivables helped the company return to profitability, ITT Financial must now demonstrate that it can achieve strong and profitable growth in consumer secured real estate lending. Earnings should begin to recover gradually to more normalized and stable levels as new management initiatives take hold and problem assets decline and become less of a drag on earnings. However, it is likely that the company's entrance into the competitive residential mortgage business will take some time to provide strong revenues.
 ITT Financial maintains a well capitalized balance sheet because of substantial capital infusions from ITT Corp. The debt-to-equity ratio, excluding the company's banking operations, is managed to a conservative 6.6x.
 -0- 11/9/93
 /CONTACT: Helene L. Moehlman, CFA, 212-908-0606, or Nancy E. Stroker, CFA, 212-908-0533, both of Fitch/
 (ITT)


CO: ITT Financial Corp. ST: IN: FIN SU: RTG

MP -- NY062 -- 3623 11/09/93 11:17 EST
COPYRIGHT 1993 PR Newswire Association LLC
No portion of this article can be reproduced without the express written permission from the copyright holder.
Copyright 1993 Gale, Cengage Learning. All rights reserved.

Article Details
Printer friendly Cite/link Email Feedback
Publication:PR Newswire
Date:Nov 9, 1993
Words:419
Previous Article:AMEX TO BEGIN TRADING OPTIONS ON PHARMACEUTICAL RESOURCES, INC.
Next Article:COMCAST CELLULAR COMMUNICATIONS LAUNCHES DIGITAL MESSAGING SERVICE
Topics:

Terms of use | Copyright © 2016 Farlex, Inc. | Feedback | For webmasters