Tenneco Automotive Inc.'s senior secured bank term loan has been rated 'BB' by the New York rating agency Fitch IBCA. The company's senior unsecured debt rating is 'BB-' and its 11 5/8 percent senior subordinated debentures due 2009 are rated `B+'. Approximately $1.05 billion of bank term debt is outstanding, along with $500 million of senior subordinated debt.

Fitch IBCA said the ratings reflect the company's strong business franchises, balances within the operations, and free cash generation. These strengths are tempered by a leveraged financial position that limits opportunities in a consolidating industry and continued weakness in the aftermarket, it added.

Going forward, Tenneco aims to build on its positions in ride control and exhaust systems and modules for the original equipment and aftermarket customers, aiming to balance cash flow contributions from these channels as well as geographic markets, Fitch IBCA said.

Even though its financial flexibility remains constrained, the company continues to seek small acquisitions to broaden and deepen its technical capabilities, the rating agency said.

Over the near term, one of Tenneco's priorities will be debt reduction to strengthen its credit profile and to gain a measure of financial flexibility, IBCA said. While a strong U.S. and European original equipment market outlook should support cash flows this year, Tenneco, as well as its competitors, continue to re-size their investments in the aftermarket, it added.

Cost savings from restructuring actions taken in the last two years should begin to flow through, and these actions should also release substantial working capital for debt reduction, it concluded.

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