Moody’s rates Wesco notes Caa2, Ca

Moody’s Investors Service said it assigned Caa2 ratings to Wesco Aircraft Holdings, Inc.'s (Incora) new senior secured first-lien notes due 2026 and Ca ratings to the company's new senior secured second-lien notes due 2027.

Concurrently, the agency downgraded the ratings on the 8˝% senior secured notes due 2024 to Ca from Caa3 and also downgraded the ratings on the 9% senior secured notes due 2026 to Ca from Caa3 as these notes no longer benefit from a security package. Moody's also affirmed the Ca ratings on the company's senior unsecured notes due 2027. Moody's changed the ratings outlook to stable from negative.

The rating actions follow Incora's recent recapitalization under which the company issued the new notes, Moody’s said. Incora also amended the indentures of its 8.5% senior secured notes and 9% senior secured notes, such that these notes are now unsecured and rank equally with the company's other unsecured notes. Concurrently, Incora received $250 million of cash from new incremental notes and extended the maturity of more than $450 million in debt. The company also reduced its cash interest expense by issuing debt with pay-in-kind interest features.

Moody's said it considers the transaction a distressed exchange and, as such, will append an LD to the post-transaction PDR to indicate a limited default, which will be removed after three business days.

“"The rating actions balance the benefits of the transaction –– a partially extended capital structure and liquidity enhancements –– against Incora's still very high leverage and 2024 debt maturities, which raise the likelihood of another restructuring event or transaction that Moody's would consider to be a distressed exchange in the next few years," said Eoin Roche, Moody's lead analyst for the company, in a press release.

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