S&P rates On Assignment loan BB

S&P assigned its BB issue-level rating and 3 recovery rating to On Assignment Inc.'s proposed $822 million senior secured term loan due 2025.

The 3 recovery rating indicates an expectation for meaningful recovery (50%-70%; rounded estimate: 50%) of principal in the event of a payment default.

The outlook is stable.

The agency also affirmed the BB corporate credit rating and the BB issue-level rating on the company's $594 million senior secured term loan due June 2022. The 3 recovery rating is unchanged, indicating an expectation for meaningful (50%-70%; rounded estimate: 50%) recovery.

On Assignment will use the proceeds from the new issuance to fund its $755 million acquisition of ECS Federal LLC and to pay related fees and expenses.

S&P said the affirmation reflects an expectation that On Assignment's adjusted leverage, pro forma for the debt-funded acquisition, will increase to the high-3x area from 2.2x as of Sept. 30, but will decline subsequently due to EBITDA growth, good cash flow conversion and debt repayment.

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