S&P rates Hexcel notes BBB-

Standard & Poor’s said it assigned a BBB- rating to Hexcel Corp.’s proposed $300 million unsecured notes due 2025.

The agency also said it rated the facility in-line with the company’s BBB- corporate credit rating because it does not believe that there is a material amount of priority claims that come ahead of the notes in a bankruptcy scenario.

The proceeds will be used to repay a portion of the $508 million outstanding under the company’s $700 million revolver due 2019 and for general corporate purposes, which could include share repurchases, S&P said.

While this could cause Hexcel’s credit metrics to deteriorate modestly depending on how much of the proceeds are used for share repurchases, the agency said it continues to expect the company to maintain a debt-to-EBITDA metric of between 1.3x and 1.8x, the agency said.

The ratings also factor in the company’s strong and steadily improving profitability, meaningful end-market diversity and favorable shift toward the increasing use of composites on new aircraft, S&P said.

The ratings are partly offset by its participation in the cyclical and competitive commercial aerospace industry, as well as the volatile demand for industrial products, particularly for wind-power generation, the agency said.

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