CHICAGO--(BUSINESS WIRE)--Fitch Ratings has affirmed the Issuer Default Ratings (IDR) for Textron Inc. (TXT) and Textron Financial Corporation (TFC) at 'BBB-'. The Rating Outlook is Stable. TXT's short-term ratings have been affirmed at 'F3'. Fitch has simultaneously withdrawn the ratings for business reasons. A full rating list follows at the end of this release.

KEY RATING DRIVERS

TXT's ratings incorporate well-established market positions in the company's aerospace, defense and industrial businesses; improving free cash flow; effective product development; adequate liquidity; and disciplined cash deployment. In addition, TXT has reduced its reliance on TFC which has largely completed its exit from the non-captive portfolio. Margins at the manufacturing business should continue to benefit from cost controls and the acquisition of Beechcraft earlier in 2014.

These rating strengths are offset by TXT's exposure to the cyclical business jet market which is beginning to recover from an extended downturn; pressure on the U.S. defense budget that affects military sales at Bell and Textron Systems; and normal integration risks related to acquisitions. In addition, TFC's non-accrual accounts are relatively high, but potential concerns about credit quality in the captive portfolio are mitigated by TFC's experience managing aviation receivables.

TFC's ratings are equalized with those of TXT, reflecting the strong operational and financial linkages between the two companies and the strategic importance of TFC to its parent as illustrated through a support agreement. The agreement requires TXT to maintain full ownership in TFC and ensure TFC has a minimum net worth of $200 million and fixed-charge coverage of 1.25x. Other factors supporting the rating linkage include a shared corporate identity and common management.

Fitch has affirmed and withdrawn the following ratings for TXT and TFC:

Textron Inc.

--Issuer Default Rating (IDR) 'BBB-';

--Senior unsecured bank credit facility 'BBB-';

--Senior unsecured bank term loan 'BBB-';

--Senior unsecured notes 'BBB-';

--Short-term IDR 'F3';

--Commercial paper 'F3'.

Textron Financial Corporation

--IDR 'BBB-';

--Junior subordinated notes 'BB'.

Additional information is available at 'www.fitchratings.com'.

Applicable Criteria and Related Research:

--'Corporate Rating Methodology' (May 2014);

--'Parent and Subsidiary Rating Linkage' (May 2014);

--'Finance and Leasing Companies Criteria' (December 2012);

--'Global Financial Institutions Rating Criteria' (January 2014);

--'Rating FI Subsidiaries and Holding Companies' (August 2012).

Applicable Criteria and Related Research:

Corporate Rating Methodology - Including Short-Term Ratings and Parent and Subsidiary Linkage

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=749393

Parent and Subsidiary Rating Linkage

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=685552

Finance and Leasing Companies Criteria

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=696720

Rating FI Subsidiaries and Holding Companies

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=679209

Global Financial Institutions Rating Criteria

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=732397

Additional Disclosure

Solicitation Status

http://www.fitchratings.com/gws/en/disclosure/solicitation?pr_id=929355

ALL FITCH CREDIT RATINGS ARE SUBJECT TO CERTAIN LIMITATIONS AND DISCLAIMERS. PLEASE READ THESE LIMITATIONS AND DISCLAIMERS BY FOLLOWING THIS LINK: HTTP://FITCHRATINGS.COM/UNDERSTANDINGCREDITRATINGS. IN ADDITION, RATING DEFINITIONS AND THE TERMS OF USE OF SUCH RATINGS ARE AVAILABLE ON THE AGENCY'S PUBLIC WEBSITE '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. FITCH MAY HAVE PROVIDED ANOTHER PERMISSIBLE SERVICE TO THE RATED ENTITY OR ITS RELATED THIRD PARTIES. DETAILS OF THIS SERVICE FOR RATINGS FOR WHICH THE LEAD ANALYST IS BASED IN AN EU-REGISTERED ENTITY CAN BE FOUND ON THE ENTITY SUMMARY PAGE FOR THIS ISSUER ON THE FITCH WEBSITE.