S&P rates Huntington Ingalls loan BBB

Standard & Poor’s said it assigned a BBB rating and 1 recovery rating to Huntington Ingalls Industries Inc.’s $1.25 billion revolving credit facility due 2020.

The 1 recovery rating indicates 90% to 100% expected default recovery.

The agency also said it affirmed the BB+ rating on the company’s unsecured notes. The 4 recovery rating on the unsecured notes remains unchanged, reflecting 30% to 50% expected default recovery.

The new revolver replaces the company’s previous $650 million revolver and the company used cash on hand to pay off the $345 million of outstanding debt remaining on its term loan, S&P said.

The proposed transaction is not expected to significantly alter the company’s credit metrics, so its corporate credit rating and outlook are unchanged, the agency said.

The ratings reflect Huntington Ingalls’s position as one of only two builders of large ships for the U.S. Navy and its large backlog, which should provide the company with steady demand for the next few years, S&P said.

But, the company has limited product and customer diversity and is exposed to possible long-term budget pressures, the agency said.

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