S&P upgrades Sequa

S&P said it raised the corporate credit rating on Sequa Corp. to B- from SD (selective default).

The outlook is stable

The agency also raised the rating on the company's unsecured debt to CCC from D with a 6 recovery rating, which indicates 0 to 10% expected default recovery.

S&P also said it affirmed the B- rating on the $135 million first-lien revolver and $920 million term loan issued by subsidiary Sequa Mezzanine Holdings LLC. The 3 recovery rating on the loan indicates 50% to 70% expected default recovery.

The agency also said it affirmed the CCC rating on its $350 million second-lien term loan. The 6 recovery rating indicates 0 to 10% expected default recovery.

The upgrades reflect a belief that the completion of the distressed exchange and refinancing improved Sequa's liquidity by pushing out debt maturities several years, S&P said.

The lower debt levels following the transaction also improved the sustainability of the company's capital structure, the agency said.

Despite the $395 million reduction in debt from the transactions and recent revenue and earnings improvements from new contracts and cost-reduction efforts, S&P said it expects Sequa's debt leverage to remain high with debt-to-EBITDA higher than 7x until at least 2019.

Leverage, however, will be below the 13.9x ratio the company had prior to the transactions, the agency added.

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