Moody's ups Aeroflex, rates loan B1

Moody's Investors Service said it upgraded Aeroflex Inc.'s corporate family and probability of default ratings to B1 from B2, $50 million senior secured first-lien revolver due 2013 and $373 million senior secured term loan due 2014 to Ba2 (LGD-2, 25%) from Ba3 (LGD-2, 25%), $116 million senior secured term loan due 2014 to B2 (LGD-4, 66%) from B3 (LGD-4, 66%) and $14 million senior subordinated payment-in-kind term loan due 2015 to B3 (LGD-6, 96%) from Caa1 (LGD-6, 96%).

Moody's affirmed the SGL-2 speculative-grade liquidity rating and assigned B1 (LGD-3, 49%) ratings to the proposed senior secured credit facilities, consisting of a new $725 million term loan B due 2018 and $75 million revolver due 2016.

The outlook is stable.

The upgrade reflects the company's solid revenue growth and operating margin and EBITDA expansion, plus the expectation for improvement in free cash flow and further reduction in total debt to EBITDA to below the 4 times level, Moody's said.

The ratings consider that Aeroflex's operating performance and earnings are less volatile and more consistent across business cycles relative to its rated peers in the semiconductor space, the agency added.

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