Moody's downgrades Sensata loans, rates loan Baa3, notes Ba3

Moody's Investors Service said it assigned a Baa3 (LGD2) rating to Sensata Technologies BV's proposed $600 million incremental term loan and a Ba3 (LGD5) rating to its proposed $400 million senior notes, downgraded its $250 million senior secured revolving credit facility due 2016 and $475 million senior secured credit facility due 2019 to Baa3 (LGD2) from Baa2 and speculative grade liquidity rating to SGL-2 and confirmed its corporate family rating at Ba2, probability of default rating at Ba2-PD and existing senior notes at Ba3 (LGD5).

These rating actions conclude the review for downgrade that began on Aug. 19 following Sensata's announcement that it would acquire Schrader International (B2), also known as August Cayman. The outlook is stable.

The proceeds of the incremental term loan and notes are expected to be used to fund the $1 billion acquisition of Schrader.

The agency said the confirmation of Sensata's Ba2 corporate family rating reflects the company's strong business position in the sensor market along with the expectation that its ratio of debt to EBITDA of about 4.5 times, pro forma for the Schrader acquisition financing, will decline over the next two years to once again be reflective of the Ba2 rating category.

The downgrade of the senior facilities reflects the additional first-lien debt that would share in recovery under a reorganization scenario, Moody’s said.

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