United Parcel Service Inc.'s Proposed Senior Unsecured Notes Rated 'A+'


NEW YORK (S&P Global Ratings) March 13, 2019--S&P Global Ratings today 
assigned its 'A+' issue-level rating to Atlanta-based United Parcel Service 
Inc.'s (UPS) proposed senior unsecured notes due 2029 and 2049. We expect that 
UPS will use the proceeds from these notes for general corporate purposes, 
including upcoming debt maturities.

The negative outlook on our 'A+' issuer credit rating on UPS reflects our view 
that it will likely take longer than previously expected for UPS' funds from 
operations (FFO)-to-debt ratio to improve to the mid- to high-30% area (our 
FFO-to-adjusted debt metric excludes UPS' exposure to multi-employer pension 
plans {MEPPs}, which we factor into our analysis, because that information is 
provided to us on a confidential basis). Although we expect the company's 
earnings and cash flow will continue to increase because of the growth of 
e-commerce and management's operating-efficiency programs, the substantial 
pension deficit under its own plans and MEPPs in which it participates is a 
drag on credit measures. We anticipate this will result in an FFO-to-debt 
ratio in the low-30% area in 2019.

ISSUE RATINGS – SUBORDINATION RISK ANALYSIS
CAPITAL STRUCTURE
UPS' capital structure consists of about $24 billion of unsecured debt issued 
by UPS Inc., approximately $700 million of debt issued by subsidiary, United 
Parcel Service of America Inc. (guaranteed by UPS Inc.), and a small amount of 
facility notes and bonds issued by both UPS Inc. and United Parcel Service of 
America Inc.

ANALYTICAL CONCLUSIONS
We rate UPS' unsecured debt 'A+', the same as our issuer credit rating, 
because no significant elements of subordination risk are present in the 
company's capital structure.
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