Moody's introduces new ratings

Moody's Investors Service has introduced two new ratings: probability-of-default ratings and loss-given-default ratings.

The agency's current long-term credit ratings are opinions about expected credit loss that incorporate both the likelihood of default and the expected loss in the event of default. The loss-given-default rating methodology will disaggregate these two key assessments in long-term ratings.

The agency said this methodology will enhance the consistency in its notching practices across industries and will improve the transparency and accuracy of its ratings, as Moody's research shows that credit losses on bank loans have tended to be lower than those for similarly rated bonds.

Probability-of-default ratings are assigned only to issuers, not specific debt instruments, and use the standard Moody's alpha-numeric scale. They express Moody's opinion of the likelihood that any entity within a corporate family will default on any of its debt obligations.

Loss-given-default assessments (or LGDs) are assigned to individual rated debt issues - loans, bonds and preferred stock - and also express Moody's opinion of expected loss as a percent of principal and accrued interest at the resolution of the default, with assessments ranging from LGD1 (loss anticipated to be 0%-9%) to LGD6 (loss anticipated to be 90%-100%).

Below is a list of the rating actions for Moody's rated companies, sorted by industry. The rating immediately after the company name denotes the corporate family rating and the percentages next to the LGDs represent the expected loss-given-default rates.

Aerospace and defense

AAR Corp., B1; probability-of-default rating: B1; notes and convertible notes, upgraded to B1 from B2, LGD4, 55%; senior unsecured shelf, upgraded to B1 from B2, LGD4, 55%; senior subordinated and preferred stock shelves, upgraded to B3 from Caa1, LGD6, 97%.

Alliant Techsystems Inc., Ba3; probability-of-default rating: Ba3; revolver and term loan, upgraded to Baa3 from Ba2, LGD2, 10%; notes and convertible notes, upgraded to B1 from B2, LGD4, 64%.

Ameriqual Group, LLC, B1; probability-of-default rating: B1; global notes, downgraded to B2 from B1, LGD4, 62%.

Armor Holdings Inc., Ba3; probability-of-default rating: Ba3; notes and convertible notes, B1, LGD5, 77%.

AT Holdings Corp., B2; probability-of-default rating: B2; discount global notes, Caa1, LGD6, 92%. Argo-Tech Corp., revolver and term loan, upgraded to Ba2 from B1, LGD1, 4%; global notes, upgraded to B2 from B3, LGD3, 48%.

BE Aerospace, Inc., B1; probability-of-default rating: B1; revolver and term loan, Ba3, LGD2, 29%; senior notes, downgraded to B2 from B1, LGD4, 64%; senior subordinated notes, B3, LGD5, 83%.

Bombardier Inc., Ba2; probability-of-default rating: Ba2; notes, Ba2, LGD4, 54%. Bombardier Capital Inc., medium-term notes, Ba2, LGD4, 54%. Bombardier Capital Funding Ltd. Partnership, notes, Ba2, LGD4, 54%.

DeCrane Aircraft Holdings, Inc., B3; probability-of-default rating: B3; revolver and term loan, upgraded to Ba3 from B3, LGD2, 17%; notes, upgraded to Caa2 from Caa3, LGD6, 94%.

DRS Technologies, Inc., B1; probability-of-default rating: B1; revolver and term loan, upgraded to Ba1 from Ba3, LGD2, 12%; senior notes and senior convertible notes, upgraded to B1 from B2, LGD3, 47%; senior subordinated notes, B3, LGD5, 84%.

Esterline Technologies Corp., Ba2; probability-of-default rating: Ba2; notes, Ba3, LGD5, 75%.

GenCorp Inc., B2; probability-of-default rating: B2; revolver and term loan, upgraded to Ba2 from B1, LGD1, 9%; senior subordinated notes, upgraded to B1 from Caa1, LGD3, 32%; convertible subordinated notes and contingent convertible subordinated notes, upgraded to Caa1 from Caa2, LGD5, 78%.

Hexcel Corp., B1; probability-of-default rating: B1; term loan and revolver, upgraded to Ba2 from Ba3, LGD2, 26%; notes, B3, LGD5, 78%.

K & F Industries Holdings, Inc., B2; probability-of-default rating: B2. K & F Industries, Inc., revolver and term loan, upgraded to Ba3 from B2, LGD2, 26%; notes, Caa1, LGD5, 81%.

L-3 Communications Holdings, Inc., Ba2; probability-of-default rating: Ba2; convertible notes, Ba3, LGD4, 68%; L-3 Communications Corp., notes, Ba3, LGD4, 68%.

Mecachrome International Inc., B2; probability-of-default rating: B2; revolver and term loan, upgraded to Ba2 from B1, LGD2, 13%; notes, upgraded to B3 from Caa1, LGD4, 69%.

Moog Inc., Ba2; probability-of-default rating: Ba2; notes, Ba3, LGD5, 73%.

Orbital Sciences Corp., Ba2; probability-of-default rating: Ba2; notes, Ba3, LGD4, 61%.

Sequa Corp., B1; probability-of-default rating: B1; notes, upgraded to B2 from B1, LGD4, 60%.

Standard Aero Holdings, Inc., B2; probability-of-default rating: B2; revolver and term loan, upgraded to Ba3 from B2, LGD2, 29%; notes, Caa1, LGD5, 81%.

TransDigm Inc., B1; probability-of-default rating: B1; revolver and term loan, upgraded to Ba3 from B1, LGD3, 36%; notes, B3, LGD5, 89%.

Vought Aircraft Industries, Inc., B2; probability-of-default rating: B2; revolver and term loan, upgraded to Ba2 from B1, LGD2, 17%; notes, B3, LGD5, 72%.

The Wornick Co., B2; probability-of-default rating: B2; notes, B2, LGD3, 49%.

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