Tyco International Ltd. has been rescued from the junkyard.

Moody’s Investors Service raised the long-term and short-term debt ratings on about $18 billion of the conglomerate’s debt by two notches, to Baa3 and Prime-3, respectively; Baa3 is the ratings company’s lowest investment-grade rating. Moody’s added that the outlook is stable.

“The rating actions reflect Tyco’s improved operational performance and more sound financial condition, following the actions taken by the new management team to focus on margin expansion, organic growth, and debt reduction,” Moody’s explained in a report. “Despite the challenges of the prior management scandals and litigation overhang,” the report continued, Tyco’s businesses “have remained relatively strong, stemming from highly diversified operations (both by product and geography), leading market positions and strong brand names.”

Moody’s added that the action reflects the company’s announced plan to accelerate debt reduction and to voluntarily contribute additional funds to its U.S and international pension plans. “Moody’s anticipates that Tyco will continue to pay down debt from increasing free cash flow due to further margin expansion as a result of organic growth, implementation of cost initiatives, and net proceeds from asset sales,” it stated.

Tyco has paid off more than $8 billion in obligations since 2002, according to Bloomberg.

Last week, Standard & Poor’s Corp. raised Tyco’s ratings to BBB, its second-lowest investment grade. S&P, however, never gave the company a junk rating.

The good news surrounding Tyco’s debt rating is in sharp contrast to seemingly damaging testimony last week in the trial of former Tyco attorney Mark Belnick, who is charged with grand larceny and securities fraud. Prosecutors assert he unfairly received $32 million in loans and payments.