Moody’s rates Allison notes, loan Ba3

Moody's Investors Service said it assigned a Ba3 rating to Allison Transmission, Inc.'s proposed $750 million offering of senior unsecured notes and Ba1 rating to the amended and extended $1.4 billion secured term loan due 2022, as well as a $400 million secured revolving credit facility due 2021.

The proceeds from the $750 million unsecured note offering, new term loan and cash on hand will be used to repay the company's existing $2.4 billion term loan, Moody’s said.

The Ba2 rating on the existing term loan and revolver will be withdrawn upon closing of the transactions, the agency said.

Allison's corporate family rating is unchanged at Ba2 and speculative grade liquidity rating at SGL-1, Moody’s said.

The outlook is stable.

The assignment of a Ba1 rating to the new secured debt compared with the Ba2 rating of the existing credit facilities reflects the improved recovery prospects that secured creditors have as a result of the significant increase in unsecured debt and the related decrease in secured debt, the agency explained.

Allison's Ba2 corporate family rating reflects an expectation that the company will maintain its position as the global leader in designing and manufacturing automatic transmissions used in class 6 and 7 trucks, buses and motor homes, Moody’s said.

This position enables the company to maintain a healthy operating profile despite the current slowdown in the North American medium-duty truck market, the agency said.

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