Honeywell Secures $1.5 Billion Revolving Credit Line

Honeywell International Inc. (HON) said it had entered into a revolving credit agreement for $1.5 billion, to be used for general corporate purposes when needed.

Citibank (C) and JPMorgan Chase (JPM) are the underwriters of the 364-day credit agreement, Honeywell said in a filing. Funds borrowed against the revolving credit agreement need be repaid no later than April 9, 2021, the company said.

The industrial conglomerate, which makes everything from aircraft engine parts to warehouse automation equipment, informed investors that the loan does not restrict its ability to pay a dividend, nor does it contain financial covenants.

Jairam Nathan, analyst at Daiwa Securities last month upgraded Honeywell to Buy from Hold with a $129 price target. Nathan noted that although 2020 is expected to be a “tough year”, given the company’s exposure to aerospace and project-based revenues, it is well-positioned with a “solid balance sheet and stronger diversified portfolio to weather the downturn, which current valuations are not reflecting”.

Other Wall Street analysts are also upbeat about Honeywell stock assigning a Strong Buy consensus rating based on 10 Buys and 3 Holds. The $159.25 average price target forecasts Honeywell shares will rise 11% in the coming 12 months. (See Honeywell stock analysis on TipRanks)  

The agreement comes after Honeywell on March 31 reported that it completed a two-year $6 billion loan agreement to bolster liquidity amid expectations that global economic conditions will persist or worsen this year due to the fast-spreading coronavirus pandemic.

As of the end of 2019, the company had $10 billion in cash, with its pension liability overfunded, it said in the March statement. Separately, Honeywell said last month that it was ramping up operations to produce millions of N95 disposable respirators to help support the need for the protective face masks.

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