S&P rates Orbital ATK notes BB, loan BBB

Standard & Poor’s said it assigned its BBB issue-level rating and 1 recovery rating to Orbital ATK Inc.’s proposed $1.8 billion secured credit facility due 2020, which includes a $1 billion revolver and an $800 million term loan A. The 1 recovery rating on the facility indicates an expectation of very high recovery (90%-100%) in a default scenario.

At the same time, S&P assigned a BB issue-level rating and 5 recovery rating to the company’s proposed $400 million unsecured notes due 2023. The 5 recovery rating on the notes reflects an expectation for modest recovery (10%-30%; upper half of the range) in a default scenario.

Finally, S&P placed the BB- issue-level rating on the company’s existing $300 million unsecured notes due 2021 on CreditWatch with positive implications.

“We will raise our rating on the notes to BB when the company completes its proposed refinancing. We will also revise our recovery rating on the notes to 5 from 6 following the refinancing because the amount of secured debt ahead of the notes will be reduced,” S&P said in a news release.

S&P said its ratings on Orbital ATK reflect its leading positions in small-to-midsize space systems and small-caliber ammunition, which are partly offset by the risky nature of the launch business and the budget pressures that are currently affecting both U.S. defense spending and NASA.

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