Dow Jones Newswire | Fitch Ratings lifted its outlook on Navistar
International Corp. and its financing arm to positive from negative. Shares were recently up 2.1 percent to $41.52.

Fitch cited in its outlook change a partnership with the financing unit
of General Electric Co., which is expected to improve the truck maker’s
ability to provide large loans for its customers’ purchases.

The ratings agency said historically it had concerns with the financing arm’s funding, capitalization and asset-quality performance. But those concerns have been eliminated or reduced with the new agreement with GE Capital, which is expected to reduce funding and capital needs but still allow Navistar to continue to offer retail financing to its customers.

Additionally, GE Capital’s funding capacity may allow the company to obtain a greater share of fleet customers as Navistar’s own financing arm couldn’t always get the amount of funding that was needed and/or with competitive prices and terms. Reduced access to credit has delayed trucking companies from replacing their fleets, a major factor that has hurt Navistar and its competitors.

Performance of manufacturing operations will be a key driver of Navistar’s credit quality and improvement of the company’s ratings will be driven by the pace of the truck market’s rebound, according to Fitch. It sees top-line growth this year, but believes margins could contract as a smaller portion of its business comes from military sales.

Navistar’s rating stands at BB-, which is three notches into junk territory.

Last week, Navistar reported its fiscal first-quarter profit slumped 93 percent on a big year-earlier litigation gain, as revenue and margins also declined.