BOSTON (Bloomberg) ? Tyco International Ltd.?s debt ratings were raised one notch by Standard & Poor?s Corp. to the second-lowest investment grade because of improvements in the conglomerate?s capital structure.

Standard & Poor?s lifted Tyco?s ratings to BBB from BBB-, S&P analyst Joel Levington said in a statement. The company had about $20.7 billion of debt as of the end of March. Its short-term corporate credit and commercial paper ratings were raised to A-2 from A-3. The outlook is positive, the rating company said.

Chief Executive Ed Breen, 48, is streamlining Tyco by cutting jobs, selling some units and paying down debt accumulated under predecessor L. Dennis Kozlowski.

Moody?s Investors Service, which rates Tyco two notches below junk, said April 28 it may raise the company?s ratings. Breen has said he won?t make acquisitions this year and will instead use cash to cut debt further.

?Driving these ongoing improvements are management?s strategies of strengthening operating efficiencies, divesting non-core units, and using improving and substantial free cash flow toward reducing debt,? Levington wrote.

The upgrade takes into consideration potential costs to settle shareholder lawsuits and a pending tax audit by the Internal Revenue Service. Those costs, which have not been broken out by Tyco, could be as much as $4 billion, Levington said.

Tyco?s 5.8 percent bonds maturing in August 2006 rose 5 cents on the dollar to 104.39 cents, pushing the yield down to 3.67 percent, according to a Bloomberg market average price.

Shares of Tyco, based in Bermuda and run from West Windsor, New Jersey, rose 32 cents to $30.28 at 12:10 p.m. in New York Stock Exchange composite trading. They had risen 13 percent so far this year.