Fitch Expects to Rate United Technologies' $1.25B Sr. Unsecured Notes at 'A+'

Fitch Ratings expects to assign a rating of 'A+' to United Technologies Corporation's (NYSE:UTX) $1.25 billion of new 6.125% ten-year senior unsecured notes. Proceeds will be used to repay commercial paper which UTX uses for general corporate purposes, including financing acquisitions and stock repurchases. Proceeds will also be used to repay a portion of balances outstanding under a revolving credit facility.

The Rating Outlook is Stable. Approximately $10.4 billion of debt was outstanding as of Sept. 30, 2008.

The ratings for UTX reflect the company's strong free cash flow, its geographic and product diversification, consistent financial policies and considerable financial flexibility. The impact of a slowing economy is being felt most acutely in UTX's commercial businesses, primarily the Carrier segment that sells into the weak residential and commercial refrigeration markets. By comparison, UTX's aerospace businesses continue to report favorable results, reflecting high backlogs and relatively stable defense spending. Excluding the impact of foreign currency, UTX expects its aerospace revenue to grow by 8-10% in 2009, helping to maintain the company's overall operating margins before restructuring. However, risks to UTX's results include declining air traffic that affects aftermarket revenues, the potential for production rate cuts for large commercial aircraft and regional jets related to lower air traffic and possible difficulties in arranging aircraft financing, and foreign currency movements that UTX anticipates could depress sales and profit growth toward nominal levels.

Other concerns center on the weak global economy that could potentially have an adverse effect on all of UTX's businesses, litigation risk, and spending for acquisitions and share repurchases that continue to represent the primary use of UTX's free cash flow. While historically UTX has maintained its credit ratios within a stable range, large acquisitions or share repurchases could potentially have a negative impact on the ratings or outlook. UTX's credit metrics have typically been sustained near the levels reported at Sept. 30, 2008 including total adjusted debt/operating EBITDAR of 1.6x and free cash flow to total adjusted debt (including certain off-balance sheet liabilities) of 27%. UTX's new debt will support its liquidity that included cash balances of $3.6 billion and $2.5 billion of availability under two bank credit facilities that expire in 2011, offset by 2.3 billion of debt due within one year.

Fitch's ratings for UTX are as follows:

--Issuer Default Rating (IDR) 'A+';

--Senior unsecured debt 'A+';

--Senior unsecured bank credit facilities 'A+';

--Short-term IDR 'F1';

--Commercial paper 'F1'.

Fitch's rating definitions and the terms of use of such ratings are available on the agency's public site, www.fitchratings.com. Published ratings, criteria and methodologies are available from this site, at all times. Fitch's code of conduct, confidentiality, conflicts of interest, affiliate firewall, compliance and other relevant policies and procedures are also available from the 'Code of Conduct' section of this site. The issuer did not participate in the rating process other than through the medium of its public disclosure.