S&P cuts Vertex, rates loan B

S&P said it downgraded Vertex Aerospace Services Corp.’s issuer rating to B from B+ and assigned B issue and 3 recovery ratings to its planned $890 million seven-year term loan.

Vertex agreed to buy Raytheon Technologies Corp.’s defense training, professional services, mission critical solutions, and modernization and sustainment business lines, which it will fund with a combination of debt and equity.

S&P said it downgraded Vertex because it expects the acquisition to boost Vertex’s leverage into the mid-6x area before retreating to under 6x in 2023.

The outlook is stable.

Moody’s rates Vertex loan B1

Moody’s Investors Service said it gave a B1 rating to Vertex Aerospace Services Corp.’s upcoming $890 million first lien term loan.

Concurrently, the agency finished its review of the company and confirmed all its ratings, including the B2 rating on its first-lien term loan due 2027.

Vertex plans to use the proceeds, a second-lien term loan and equity to refinance its debt, including the loan due 2027, and acquire the mission support, training and maintenance services business from Raytheon Technologies Corp. for $900 million.

Moody’s said it assigned the new first-lien loan a higher rating than the outstanding loan because the loss absorption provided by the new second-lien loan. The B2 rating on the first-lien term loan has been confirmed and will be withdrawn on the termination of the facility .

“With this transformative acquisition, Vertex will more than double in size and expand its range of defense services offerings,” Moody’s said in a press release.

The outlook is stable.

Moody's upgrades Anastasia

Moody's Investors Service said it upgraded Anastasia Parent, LLC's corporate family rating to Caa2 from Caa3 and its probability of default rating to Caa2-PD from Caa3-PD. Moody's also upgraded Anastasia's first-lien senior secured revolving credit facility and term loan ratings to Caa2 from Caa3.

“The upgrade reflects that Anastasia's sales and earnings are recovering faster than Moody's previously anticipated following from improved market demand for color cosmetics as consumers continue to get vaccinated and resume more away-from-home activities. Better earnings also reflect the company's cost reduction initiatives and reduced promotional activities that Anastasia had to leverage during the peak of the pandemic to reduce its inventory,” Moody’s said in a press release.

The agency noted Anastasia is also benefiting from its high specialty retail concentration. Sephora and Ulta are growing their presence with Kohl’s and Target, respectively, and higher foot traffic means higher sales to the brands they carry, including Anastasia.

The outlook is stable.

Moody's assigns Ba3 to Parkway loans

Moody's Investors Service said it assigned a Ba3 rating to Parkway Generation, LLC's expected $1.24 billion senior secured credit facilities consisting of a $1 billion seven-year term loan B, a $140 million seven-year term loan C and a $100 million five-year revolver.

Term loan B proceeds combined with equity contributed from affiliates of ArcLight Capital Partners, LLC will be used to fund Parkway's purchase of eight generating assets totaling about 4.8 gigawatts of generating capacity within the PJM Interconnection from Public Service Enterprise Group Inc. Proceeds from the term loan C will be used to cash collateralize letters of credit to be issued by Parkway in the normal course of business.

“The Ba3 rating considers the competitive profile of Parkway's portfolio of generating assets, most of which are of recent vintage, operate at competitive heat rates relative to their respective operating profiles and have been well maintained with strong operating performance under PSEG ownership,” Moody’s said in a press release.

The outlook is stable.

S&P rates Parkway loans BB

S&P said it assigned its preliminary BB rating to Parkway Generation LLC's planned $1 billion senior secured term loan B and $140 senior secured term loan C due in 2028.

The preliminary 1 recovery rating indicates an expectation for full (90%-100%; rounded estimate: 95%) recovery in default.

Parkway will use the proceeds from the term loan B to partially fund the acquisition of eight gas-fired power plants from PSEG Power.

The outlook is stable.

S&P boosts Elis

S&P said it raised its ratings on Elis SA and on the group's senior unsecured debt to BB+ from BB. The 3 recovery rating, which indicates an expectation of about 60% recovery in default, remains unchanged.

“The upgrade reflects our expectation of material improvement in Elis' credit metrics in 2021 based on solid and profitable revenue growth, which we view as sustainable. After facing a significant impact from Covid-19 in 2020, with a 14.5% year-on-year revenue decline, Elis achieved resilient performance in the first nine months of 2021, despite persistently challenging market conditions,” the agency said in a press release.

The agency said it sees the group gradually recovering lost revenue particularly in the trade services and health care segments.

The outlook is stable.

Moody's boosts Owens & Minor

Moody's Investors Service said it upgraded the ratings of Owens & Minor, Inc., including its corporate family rating to Ba3 from B1, its probability of default rating to Ba3-PD from B1-PD and its senior unsecured notes' rating to B1 from B2.

` Moody's also affirmed the rating on the senior secured credit facilities at Ba2. There is no change to the speculative grade liquidity rating of SGL-1, signifying very good liquidity. The agency also changed the outlook to stable from positive.

“The upgrade of the CFR reflects Owens & Minor's improved business profile mainly driven by strong operating performance and cash flow generation. The upgrade is also supported by an improvement in profitability and a reduction in leverage driven by earnings growth, with adjusted debt/EBITDA of 2.1x for the 12 months ended June 30, 2021 (vs. 3.2x December 31, 2020). Owens & Minor has benefitted from strong demand in the company's manufacturing business, which produces personal protective equipment (PPE) used to prevent the transmission of coronavirus and other infectious diseases,” the agency said in a press release.

The stable outlook reflects an expectation that financial leverage will remain between 2x and 3x over the next 12 to 18 months, Moody’s said.

S&P ups Southwest certificates

S&P said it raised its rating on Southwest Airlines Co.'s series 2007-1 class B enhanced equipment trust certificates to A+ from A.

There is no change to the airlines’ other ratings, including the class A certificates, the BBB issuer credit rating or positive outlook, the agency said.

“The upgrade reflects our revised view of collateral credit following an additional amortization payment in August. Loan-to-value ratios have improved such that we now believe there is limited difference between the ratios of each class. While collateral credit, along with our view of affirmation credit, support additional notching, our ratings are limited under our criteria due to the transaction's lack of a cross-default provision. Therefore, our rating is the same on both the class A and class B certificates,” S&P said in a press release.

S&P noted the aircraft backing the notes at 15 years old are among Southwest’s older aircraft.

S&P puts ProFrac on positive watch

S&P said it placed its CCC+ ratings on ProFrac Services LLC and its senior secured debt on CreditWatch with positive implications.

“The CreditWatch placement follows ProFrac's announcement that it will acquire its oilfield services peer FTS International for about $400 million in cash. We expect the company's funding allocation for the transaction will allow the combined entity to maintain financial measures consistent with a higher rating. The transaction will also more than double the size of ProFrac's active completions fleet, providing it with increased scale in the Permian Basin and Eagle Ford, while adding new markets in the Rockies and Mid-Continent regions,” S&P said in a press release.

The agency said it could raise ProFrac’s ratings if the deal closes as expected and the combined entity's debt leverage remains comfortably below 5x while it keeps funds from operations to debt of more than 12%.

S&P said it aims to resolve the CreditWatch around the transaction’s close, expected to be in the first quarter of 2022.

S&P puts Ventia on positive watch

S&P said it placed its BB ratings on Ventia Services Pty Ltd. and its first-lien debt on CreditWatch with positive implications.

“We placed Ventia on CreditWatch with positive implications following the company's proposed IPO and public listing which, in our view, should improve the group's creditworthiness in the near term. Following the completion of the listing, expected in late November 2021, we expect the company to utilize IPO proceeds to reduce debt and believe its commitment to a prudent financial policy will sustain sufficiently low leverage to support an investment-grade rating,” S&P said in a press release.

The agency said it forecasts the company's ratio of S&P Global Ratings adjusted debt to EBITDA to be about 2x or below over the next two years, supported by solid revenue and EBITDA growth.

Moody's alters Ericsson view to positive

Moody's Investors Service said it changed to positive from stable the outlook on the ratings of Telefonaktiebolaget LM Ericsson. Concurrently, the agency affirmed the company's Ba1 corporate family rating, its Ba1-PD probability of default rating and the Ba1 senior unsecured long-term debt ratings.

"The outlook change to positive from stable reflects the successful execution of the company's strategy which continues to lead to a significant improvement in the company's operating performance and margins," said Ernesto Bisagno, a Moody's vice president, senior credit officer and lead analyst for Ericsson, in a press release.

"It also reflects our expectation that Ericsson's credit metrics will continue improving over the next two years driven by the steady growth of the radio access network (RAN) market and the reduction of operating losses in the digital service (DS) segment," Bisagno added.

S&P alters Arch Resources view to stable

S&P said it changed Arch Resources Inc.’s outlook to stable from negative and affirmed its B- issuer rating.

The B issue-level rating on Arch's senior secured debt is unchanged, with a 2 recovery rating, indicating an expectation for high (75%-90%; rounded estimate: 80%) recovery in default.

The agency said it forecasts Arch’s free operating cash flow will turn positive to about $100 million in the second half of 2021 and possibly $350 million to $380 million in 2022 on higher volume.

“We anticipate 70%-80% of 2022 met coal production (about 9.5 million tons) will be sold on the international spot market, where high-vol A prices have reached $390/ton recently, compared with historical averages of about $140/ton,” S&P said in a press release.

Moody's rates American Airlines certificates Baa3

Moody's Investors Service said it assigned a Baa3 rating to American Airlines, Inc.'s $202.065 million of class B pass-through certificates, series 2021-1. The legal final maturity date is Jan. 11, 2032. The scheduled final payment date precedes the legal final maturity date by 18 months.

“On Oct. 25, 2021, Moody's assigned a Baa1 rating to the class A. Since then, the transaction was upsized to 26 aircraft, from the original 21 aircraft, and the class A certificates have been upsized to $757.825 million from $591.913 million. The upsize of the collateral does not materially change the loan to values of the transaction and therefore the rating on the class A certificates is not affected by the upsize or the issuance of the class B,” the agency said in a press release.

The proceeds will finance 26 aircraft, including 21 Airbus A321NEOs to be delivered in 2022 and five Embraer E175LRs that were delivered new to American Airlines in the fourth quarter of 2020.

The B2 corporate family rating of American Airlines Group Inc., parent of American Airlines, Inc. and the related negative rating outlook are unaffected by the assignment of a rating on the class B.

S&P assigns American Airlines EETCs BB+

S&P Global Ratings said it gave its preliminary BB+ (sf) issue-level rating to American Airlines Inc.'s series 2021-1 class B pass-through enhanced equipment trust certificates. The agency earlier assigned a preliminary A- (sf) issue-level rating to American Airlines' 2021-1 class A pass-through EETCs, which rank senior to the class B certificates and are secured by the same collateral.

American Airlines plans to finance 21 new aircraft and refinance five aircraft with about $757.8 million of class A certificates and $202.1 million of class B certificates. The class B certificates have an expected final distribution date of July 11, 2030, with legal final maturity occurring 18 months later.

The transaction will be backed by 21 new Airbus A321NEO and five Embraer E175LR aircraft–with the Airbus aircraft to be delivered between January and September 2022. The E175LR aircraft were delivered in 2020. “We view these planes as valuable collateral with relatively low technological or liquidity risks,” S&P said in a press release.

The ratings on American Airlines and its debt, including the ratings on its existing EETCs, are unchanged, the agency said.

Fitch rates American Airlines certificates BB+

Fitch Ratings said it assigned a BB+ rating to the planned $202.1 million of American Airlines Inc.’s pass-through trust certificates, series 2021-1 due July 2030.

The class B certificates are an add-on to the class A certificates announced on Monday. Fitch rated the class A certificates A and said the rating is unaffected by the class B certificates.

The class B certificate rating is based on the bottom-up approach detailed in Fitch's enhanced equipment trust certificates criteria, which calls for the rating to be notched up from American's corporate rating of B-, Fitch said.

The collateral consists of 21 A321 NEOs and 5 ERJ 175s, which the agency said it considers tier 1, citing the A321 NEO as “arguably one of the strongest pieces of collateral available” for EETCs.

Moody's rates PECF B3, loans, notes B2, notes Caa2

Moody's Investors Service said it assigned PECF USS Intermediate Holding III Corp. (United Site Services) a B3 corporate family rating and B3-PD probability of default rating. Moody's also gave B2 ratings to the company's planned $1.35 billion first-lien senior secured credit facility, including a $100 million five-year revolving credit facility and a $1.25 billion seven-year term loan, and $550 million of senior secured notes due 2028, and a Caa2 rating to the expected $750 million of senior unsecured notes due 2029.

Platinum Equity GP, an affiliate of private equity sponsor Platinum Equity, LLC, the controlling shareholder of United Site Services, along with its new Platinum Equity Capital Partners V, will raise a continuation fund vehicle that will acquire interests in USS from Platinum Equity Capital Partners Fund IV, an affiliated investment fund of Platinum, and other investors for a purchase price of $3.75 billion, the agency said.

As part of the deal, Platinum GP, along with its affiliated Fund V and new investors, collectively LPs, will fund and roll at least $1.4 billion of equity. Platinum GP and the new investors will also deliver $200 million of unfunded capital commitments.

"USS' very high pro forma leverage above eight times is partly mitigated by anticipated free cash flow and anticipated deleveraging through revenue growth and strong EBITDA margins in a low 30s percentage range," said Oleg Markin, a Moody’s assistant vice president, in a press release.

Proceeds from the debt raise and equity will be used to refinance USS’ indebtedness, buy equity interests in the company and pay related fees and expenses.

After deal closes, Platinum GP will keep controlling ownership in the company and most of the board seats. The company will also enter a new, unrated $200 million asset-based lending revolving credit facility due 2026. Moody's said it expects both revolving credit facilities will be undrawn at close.

The outlook is stable.

Moody's gives Echo B2, loans B1

Moody's Investors Service said it gave first-time ratings to Echo Global Logistics, Inc., including a B2 corporate family rating and a B2-PD probability of default rating. The agency also assigned a B1 rating to Echo Global's planned first-lien credit facilities, including a proposed $100 million revolving credit facility and a $550 million term loan.

“The B2 corporate family rating is constrained by Moody's expectation for aggressive financial policies and high financial leverage over the next 12-18 months. Under new private equity ownership, we anticipate that Echo Global will complement its historically organic growth strategy with acquisitions to add capabilities given the very fragmented nature of the third-party logistics ("3PL") market. Moody's expects Echo Global's adjusted debt/EBITDA to moderate to around 5.5 times by the end of 2022, down from approximately 6.9 times at June 30, 2021 on a pro forma basis,” the agency said in a press release.

Proceeds from the first-lien debt, along with $743 million of cash equity, will be used to finance the $1.4 billion acquisition of the company by affiliates of the Jordan Co., LP.

The outlook is stable.

Moody's eyes Oasis Midstream for upgrade

Moody's Investors Service said it placed Oasis Midstream Partners LP's ratings on review for upgrade following the news Crestwood Equity Partners LP will acquire Oasis in a deal valued at $1.8 billion, including the assumption of Oasis’ $660 million debt.

The OMP ratings on review include its B2 corporate family rating, B2-PD probability of default rating and B3 senior unsecured notes rating. The SGL-3 speculative grade liquidity rating remains unchanged.

"The potential ownership by Crestwood will likely improve Oasis Midstream's credit profile given Crestwood's stronger credit rating, the large equity component of the purchase price and potential synergies," stated James Wilkins, a Moody's vice president, a press release.

Moody’s changes Hasbro view to positive

Moody’s Investors Service said it changed the outlook for Hasbro Inc. to positive from stable and affirmed its Baa3 senior unsecured rating.

“The change to a positive outlook reflects Moody's expectation that Hasbro will meet Moody's criteria for consideration of an upgrade within the next 12-18 months including leverage below 3.5x, strong liquidity and good business momentum following Covid-related challenges and disruptions. It reflects already significant post acquisition debt repayment and management's commitment to further reduce leverage. It assumes that the company will successfully navigate near term inflationary pressures and supply chain challenges and maintain its historically conservative financial policy,” the agency said in a press release.

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