MOODY'S CONFIRMS THE DEBT RATINGS OF HOUSEHOLD INTERNATIONAL AND ITS SUBSIDIARIES
New York, 6/17/1996 -- Moody's Investors Service, Inc. confirmed the commercial paper and debt ratings for Household International and its subsidiaries following the company's announcement that it has entered into an agreement to acquire the $3.4 billion AFL-CIO Union Privilege affinity credit card portfolio from The Bank of New York (Delaware), and to receive the exclusive endorsement of the AFL-CIO to market its 13 million members.
Moody's noted that the acquisition is consistent with management's strategy of focusing on core businesses and on improving operating efficiency (in this instance through increased scale). The acquisition also reduces the concentration risk related to the GM Card program by adding a major affinity relationship to Household's group of co-branding partners.
Tempering this, however, Moody's recognizes that the premiums associated with this transaction will bring the company's tangible net worth and leverage to a level that may constrain the company's future financial flexibility.
The following ratings are confirmed:
Household International, Inc. -- Prime-2 for commercial paper; A3 for senior debt; "baa1" f or preferred stock.
Household Finance Corporation -- Prime-1 for commercial paper; A2 for senior debt; A3 for subordinated debt.
Household Bank, f.s.b. -- Prime-1 for short-term bank deposits; A2 for long-term deposits; A2 for senior debt; A3 for subordinated debt; A2 counterparty rating.
Household Bank (Nevada), NA -- A2 for senior debt guaranteed by Household Finance Corp.
Household capital Trust 1 -- "baa1" for preferred stock.
Household capital Trust 2 -- "baa1" for preferred stock.
Household Financial Corporation Limited -- A3 for senior debt guaranteed by Household International.
Household Global Funding, Inc. -- "baa1" for preferred stock.
House International Netherlands B.V. -- A3 for senior debt guaranteed by Household International.
Household International, through its subsidiaries is a major provider of consumer financial services in the United States, Canada and the United Kingdom. The company is headquarted in Prospect Heights, Illinois.
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