S&P raises Aeroflex second-lien debt to B+, rates notes B-

Standard & Poor's said it assigned a B- rating with a recovery rating of 5 to Aeroflex Inc.'s recently issued $225 million senior notes and raised the company's second-lien debt to B+ with a recovery rating of 2 from B with a recovery rating of 3.

S&P also affirmed the company's corporate credit rating at B, $450 million first-lien, first-out senior secured facilities at BB- with a recovery rating of 1, $125 million first-lien, first-loss seven-year term loan at B+ with a recovery rating of 2 and 11¾% senior secured notes at B- with a recovery rating of 5.

The outlook was revised to stable from negative, and the agency attributed the change to moderate deleveraging and margin expansion.

The ratings on Aeroflex reflect its narrow product focus, high leverage, vulnerability to defense spending levels and acquisitive growth strategy, S&P said.

These factors are offset partially by its good revenue visibility and growth, improving margins and substantial barriers to entry within its niche, the agency added.

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