S&P upgrades Gogo

S&P said it raised its ratings on Gogo Inc. and its first-lien debt to B+ from B. The debt’s 3 recovery rating indicates meaningful (50%-70%; rounded estimate: 55%) recovery in default.

“The upgrade follows the equitization of Gogo's remaining $103 million of convertible notes at maturity. Gogo completed the conversion of its notes to stock on May 16, reducing its S&P Global Ratings-adjusted leverage to the high 4x-area from about 5.3x as of Mar. 31, 2022. The conversion also lowers Gogo's interest expense, but we expect the benefit to cash flow will be more than offset by higher capital spending this year because of Gogo's 5G investments,” the agency said in a press release.

S&P also noted Gogo's first-quarter revenue and EBITDA grew 26% year over year and it expects earnings to continue to improve.

The outlook is stable.

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