S&P rates Exelis notes BBB

Standard & Poor's said it assigned a BBB corporate credit ratings to Exelis Inc. and a BBB rating to the company's proposed issuance of $350 million of unsecured notes due 2021 and $300 million of unsecured notes due 2041.

The outlook is stable.

Ratings reflect moderate debt leverage, good program and customer diversity, and leading positions in certain areas of defense electronics, the agency said.

These factors are offset by challenges replacing previously high demand for products related to the wars in Iraq and Afghanistan, slowing defense budget growth, and material required pension contributions, the agency noted.

Exelis plans to issue $890 million of debt, using the proceeds to make a $700 million dividend with the remainder to provide liquidity, according to the agency.

Pro forma for the proposed transaction, leverage will be moderate, with the ratio of debt to EBITDA of about 2.5x, S&P said.

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