Baker, Hughes Put on Credit Watch List

Duff & Phelps has become the third of the major national credit-rating agencies to place the outstanding debt securities of Baker International Corp. and Hughes Tool Co. on a watch list for possible revisions in credit ratings.

As did Standard & Poor’s and Moody’s Investor Service, Chicago-based Duff & Phelps said it may lower the credit rating of some of Baker’s outstanding debt and raise the rating of several of Hughes securities in the wake of last Wednesday’s merger of the two companies into a single unit to be called Baker Hughes Inc.

“Combining the balance sheets of the two companies as of June 30, 1986, would have resulted in a debt ratio of just under 40%, higher than that of Baker separately (with a 35% debt ratio) and lower than that of Hughes,” which had a 46% debt ratio at the end of June, a Duff & Phelps spokesman said.

Still, the spokesman said, the credit-rating agency believes that the merger “would provide the potential for substantial future reductions in operating expenses and would make the new company a formidable competitor in oil service markets, to the extent the federal government might require divestment of certain properties.” Baker, which has been headquartered in Orange, will move to Houston to combine its offices with those of Hughes.