S&P raises Aecom

S&P said it raised its ratings for Aecom to BB+ from BB and its senior unsecured notes BB from BB-. The recovery rating is 5 and indicates modest (10%-30%) recovery in default. The agency also affirmed Aecom’s secured credit facility at BBB-. The recovery rating is 1 and indicates very high (90%-100%) recovery in default.

“Aecom has consistently strengthened its credit metrics. At year-end 2023, S&P Global Ratings adjusted debt to EBITDA was 2.9x, down from above 3x in the prior few years. Lower leverage stems from the company's earnings growth and strong cash conversion. We anticipate debt to EBITDA will further deleverage organically over the next couple of years as the company's top-line growth and margin expansion materializes,” S&P said in a press release.

The agency noted that note that 80% of the issuer’s debt is fixed rate, swapped, or capped, which limits the effect of higher interest rates on its cash flows. “We see this as a credit positive and a differentiator from key peers, not only from a financial impact perspective but also from a prudent risk management angle.”

The outlook is stable.

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