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S&P rates Aecom loan BBB-
S&P said it assigned a BBB- rating and 1 recovery rating to Aecom Technology Corp.’s $185 million delayed draw term loan A due 2021.
The 1 recovery rating indicates 90% to 100% expected default recovery.
S&P also said it raised the rating on Aecom’s unsecured notes to BB from BB- and revised the recovery rating on the notes to 4 from 5.
The 4 recovery rating reflects 30% to 50% expected default recovery.
The agency also said it affirmed the BBB- rating on Aecom’s senior secured credit facility. The 1 recovery rating on the credit facility is unchanged, indicating 90% to 100% expected default recovery.
S&P also said it affirmed the BB- rating on the company's senior unsecured debt issued by URS Corp. The 5 recovery rating on the debt is unchanged, indicating 10% to 30% expected default recovery.
The proceeds from the new delayed draw term loan A will be used to repay its existing 3.85% senior unsecured notes issued by URS due April 2017, the agency said.
The upgrades of Aecom’s ratings reflect the repayments it has made under its existing term loan over the past several quarters, which have reduced its total amount of senior secured debt outstanding and increased the value available to the unsecured noteholders in a default scenario, S&P explained.
This has more than offset the addition of senior secured debt to its capital structure from the delayed draw term loan issuance, the agency said.
The refinancing transaction will not significantly alter the company's credit metrics, so the corporate credit rating on Aecom remains the same, S&P said.
The ratings also consider the company’s participation in the volatile and competitive engineering and construction industry, the agency said.
Aecom is expected to maintain a debt leverage of less than 5x, S&P added.
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