Nokia Corporation (ADR) (NYSE:NOK) (BIT:NOK1V) (HEL:NOK1V)’s long-term corporate credit rating has been raised by  Standard & Poor’s Ratings Services, on Thursday. Rating of the Finnish company and its subsidiary Nokia Solutions and Networks has been raised to ‘BB’ from ‘B+’ along with a positive outlook. Nokia’s short-term rating was also confirmed to ‘B’ by the rating agency.

Nokia Corporation

Nokia to lower debt

Nokia’s issue rating on senior unsecured notes have also been raised to ‘BB’ from ‘B+’ by the rating agency. The Finnish company’s recovery rating has been concluded to ‘3,’ which suggests that in case of a default there are meaningful expectations of 50% to 70% recovery.

According to the rating agency, the improvement in the rating indicates that the Finnish company will be able to lower its gross debt by €2 billion by utilizing the funds obtained from the sale of its struggling Device & Services (D&S) division to Microsoft Corporation (NASDAQ:MSFT). Also, the company will be able to maintain comfortable cash balances even after the returning €3 billion to the shareholders.

All the ratings of the company have been removed from the CreditWatch status placed on Sept. 9, 2013, says Standard & Poor’s.

NSN now a “core” subsidiary of Nokia

Standard & Poor have, also, raised the rating on Nokia Solutions Networks Finance B.V.’s senior unsecured debt to ‘BB’ from ‘B+’ while the recovery rating has seen improvement to ‘3’ from ‘4’, suggesting expectations of meaningful (50%-70%) recovery in case of a default.

Considering the importance of NSN for Nokia after the sale of D&S segment, the rating agency announced they will equalize their rating on NSN in-line with that of Nokia. The improved rating for NSN indicates that NSN is now a “core” subsidiary of Nokia primarily due to its integrated and material role for Nokia and Nokia’s full ownership. The rating agency also clarifies that its rating and outlook on NSN mirrors the long-term corporate credit rating and outlook on Nokia.

According to the rating agency, the positive outlook on Nokia and NSN suggests that going forward the rating could be moved yet one-notch higher provided the company is able to achieve stability in the revenues and profitability along with a positive FOCF.