WATCH PRICE TARGET - SPX Corp SPW 7.625% 12/15/2014

Despite the low earnings visibility we are constructive on the 2014 notes as a long position
with a price target of 101.0 (+503bp vs TSY 2.35%) based on the following key points:

• generation of free cash flow
• 
  low leverage
• strong liquidity position (projected to be 1bln by year-end 2009)
  
• clear commitment to reduce debt

The interest payment dates for
these notes are June 15 and December 15. The notes are
redeemable,  in whole, or in part, at any time prior to maturity at a price equal to 100% of
the principal amount plus a premium, plus accrued and unpaid interest.
In addition, at any
time prior to December 15, 2010 SPX may redeem up to 35% of
the aggregate principal amount
of the notes with the net cash proceeds of
certain equity offerings at a redemption price of
107.625%, plus accrued and
unpaid interest. In case of a change of control transaction, SPX
must offer to repurchase the notes at 101% of the aggregate principal amount of the notes
repurchased, plus accrued and unpaid interest.The notes are unsecured and rank equally with
all existing and future
unsecured senior indebtedness, but are effectively junior to the senior
credit
facilities. The indenture governing the notes contains covenants that, among
other things,
limit the company's ability to incur liens, enter into sale and leaseback
transactions  and
consummate some mergers.

At December 31, 2008, SPX was in
compliance with all covenant provisions of these senior notes.

SPX has agreed to
conduct a registered exchange offer for the notes and will use commercially
reasonable efforts to exchange the notes for a new issue of identical debt
securities within 150
days from February 28, 2009, if the notes are not freely
tradable before this date, and file under
certain circumstances a shelf
registration statement to cover resales of the notes and to cause
the
registration statement to be declared effective by the SEC. If they fail to
satisfy these obligations,
they have agreed to pay additional interest to holders
of the notes under certain circumstances.

SPX has
a $2.26 billion (originally $2.3 billion) senior secured credit
facility consisting of a $600
million revolving credit facility, $712
million (originally $750 million) term loan and $950 million
Foreign
Credit Instrument Facility. All of these facilities mature September
21, 2012. The credit
facility is secured by 100% of all material
domestic subsidiary stock and 65% of the company's
major foreign
subsidiaries' stock. All borrowings are guaranteed by SPX's domestic
subsidiaries
and SPX will guarantee all foreign subsidiary borrowings.

The credit facility has a springing lien if the corporate family rating
is rated Ba2 or less (or
withdrawn) by Moody's and BB or less (or
withdrawn) by S&P. The revolving credit facility is used
for
working capital and letters of credit needs. It could be used for the
company's stock repurchase
program. The term loan amortizes 10% per
annum with a bullet payment at maturity. The Foreign
Credit Instrument
Facility is used to support SPX's foreign operations and may be
utilized for the
issuance of performance letters of credit and other
forms of bank undertakings. The senior secured
credit facility also
benefits from priority of claims it has in relation to the company's
$549 million in
senior unsecured notes.

The 2014 notes are
junior to the obligations of the $2.26 billion senior secured credit
facility.
The unsecured notes are pari passu to each other and are the
most junior capital within SPX's
capital structure.

SPX
maintains a $130 million accounts receivable program, which is annually
renewable.

Noticeable liabilities include an underfunded pension- and underfunded post retirement plan
at USD 303MM and USD 148MM respectively. An operating lease adjustment at 8x annual
rental results in a USD 412MM debt equivalent.

Covenants:

Leverage 3.25x
Coverage 3.5x

Liquidity as per 6/09:

At the end of Q2 SPX had USD 435MM in cash and USD 325.9 of availability under the
revolver and USD 274.3 of
available issuance capacity under our foreign trade facility.