Moody's rates Booz Allen loans Ba3

Moody's Investors Service said it assigned Ba3 (LGD3, 42%) ratings to Booz Allen Hamilton Inc.'s proposed amended $500 million senior secured first-lien revolving credit facility due 2019, proposed amended $725 million senior secured first-lien term loan A due 2019 and proposed amended $1.03 billion senior secured first-lien term loan B due 2019. The Ba3 corporate family rating and Ba3-PD probability of default rating were affirmed, and the outlook is stable.

Booz Allen is in the process of amending its credit facilities. In Moody's view, longer debt maturities and greater net leverage covenant headroom will improve the company's liquidity, but the agency said the proposed loosening of the restricted payments and investments-related covenants will increase risks to creditors.

The agency said Booz Allen's Ba3 corporate family rating incorporates continued uncertainty regarding the magnitude of potential U.S. government spending cuts over the next few years together with an aggressive financial policy characterized by shareholder-friendly related activities and a willingness to increase financial leverage to fund those activities.

The Ba3 rating continues to be supported by Booz Allen's well-established business position, relatively consistent funded backlog levels and anticipated continued positive cash flow generation, Moody's said.

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