Moody's upgrades Hexcel

Moody's Investors Service said it upgraded Hexcel Corp.'s corporate family and probability-of-default ratings to Ba3 from B1, senior secured credit facility to Ba1 (LGD2, 22%) from Ba2 and senior subordinated notes to B1 (LGD5, 74%) from B3.

The outlook is stable.

The agency said the ratings reflect Hexcel's strengthening credit profile, including substantial interest coverage and modest leverage, resulting from dramatically improved operating performance during the recent recovery in the commercial aircraft original equipment manufacturer supplier sector. The ratings are further supported by Hexcel's strong competitive position in what is expected to be a continuing robust aircraft original equipment manufacturer supplier environment.

The expectation for sustained credit metrics at levels at or above those typical for the Ba3 rating outweighs risk associated with a concentration of revenue on two customers in the commercial aircraft original equipment manufacturer sector, negative free cash flow generation due to heavy current levels of expenditures on production capacity and moderating but continued uncertainties surrounding the production and delivery schedule of a major new aircraft platform - the Airbus A380, Moody's said.

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