Moody's affirms Aeroflex

Moody's Investors Service said it affirmed Aeroflex Inc.'s corporate family and probability-of-default ratings at B3 and speculative grade liquidity rating at SGL-2.

The agency also affirmed the company's $50 million senior secured first-lien revolver due 2013 and $400 million senior secured term loan due 2014 at Ba3 (LGD2, 21%), $125 million senior secured term loan due 2014 at B3 (LGD4, 56%) and $135 million senior subordinated pay-in-kind loan facility due 2015 at Caa2 (LGD6, 94%).

The outlook is positive.

The affirmation reflects the company's solid revenue growth and EBITDA expansion since the consummation of the August 2007 leveraged buyout despite the difficult demand environment for semiconductors and test and measurement products due to the economic downturn, according to the agency.

The affirmation also considers the modest improvement in leverage with a debt-to-EBITDA ratio at 6.9x, good free cash flow generation and expectation that leverage metrics will continue to improve, Moody' said.

The B3 corporate family rating reflects the company's high financial leverage and thin credit protection measures, modest footprint and limited asset protection, potentially increasing competition, exposure to weakening wireless end markets and exposure to aerospace and defense electronics end markets, Moody's said.

The rating also considers Aeroflex's leading market position, strong intellectual property portfolio, highly visible and diversified revenue base, relatively stable competitive landscape and consistent operating profitability and positive free cash flow generation, the agency noted.

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