Moody's rates GenCorp loans Ba2

Moody's Investors Service said it assigned a Ba2 rating GenCorp Inc.'s proposed senior secured credit facility, which consists of an $80 million revolving facility due 2012, a $75 million term loan due 2013 and a $125 million synthetic letter-of-credit facility due 2013.

The agency also affirmed GenCorp's B2 corporate family and probability-of-default ratings and changed the outlook to negative from stable.

The ratings reflect GenCorp's substantial debt levels relative to the company's size and earnings base, thin retained cash flow and a recent history of negative free cash flow generation, Moody's said. Ratings are further constrained by operating margins that are low relative to this industry sector and uncertainties surrounding sizeable environmental liabilities.

The ratings are supported by strong revenue visibility as implied by a large backlog as well as Aerojet's position as a key supplier of solid and liquid rocket propulsion systems for both defense and space systems application in the United States, the agency said.

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