Moody's upgrades Armstrong loans

Moody's Investors Service said it upgraded Armstrong World Industries, Inc.'s $300 million senior secured revolving credit facility due 2011, $250 million senior secured term loan A due 2011 and $190 million senior secured term loan B due 2013 to Ba1 (LGD2, 23%) from Ba2 (LGD3, 32%).

The agency also affirmed the company's Ba2 corporate family rating and Ba3 probability of default rating, and the speculative grade liquidity rating remains SGL-1.

The outlook is stable.

Moody's said the upgrade of the bank credit facilities results from secured debt repayments, which results in a lower proportion of secured debt versus unsecured claims, and lower secured claims against available collateral.

Armstrong's Ba2 rating considers the company's market position as a leader in providing flooring to the North American residential and commercial end markets and its wide customer base, the agency said.

At the same time, Armstrong's operating margins remain weak - the adjusted EBITA margin was 3.6% for the last 12 months ended in June - and the company is continuing with cost-reduction initiatives that will likely result in more charges, further dampening operating performance, Moody's said.

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