Moody's cuts Alion notes

Moody's Investors Service said it affirmed the corporate family and probability of default ratings of Alion Science and Technology Corp. at Caa1.

The existing $35 million senior secured revolving credit facility due 2014 and $248 million of senior unsecured notes due 2015 remain unchanged at B1 (LGD1, to 1% from 0%) and Caa2 (LGD5, to 79% from 78%), respectively.

The rating on the $310 million of senior secured notes due 2014 was lowered to B2 (LGD2, 26%) from B1 (LGD2, 24%) due to the recent increase in the size of the revolving credit facility from $25 million to $35 million.

The outlook is stable.

The affirmation reflects the company's continued high leverage and weak interest coverage balanced against Alion's healthy backlog and adequate liquidity profile, the agency said.

The company is not expected to be immune to changes in the defense budget such as contract funding delays, the agency added. Over the intermediate term, credit metrics are expected to remain within the Caa1 rating category.

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