S&P gives DRS Technologies convertibles B+

Standard & Poor's said it assigned its B+ rating to DRS Technologies Inc.'s proposed $300 million convertible senior notes due 2026.

The company's BB- corporate credit rating remains on CreditWatch, S&P said.

S&P noted it previously indicated that if the proposed acquisition of Engineered support Systems Inc. is completed on terms similar to those presented, the ratings on DRS would be affirmed and removed from CreditWatch. The outlook would be negative.

The pending affirmation reflects expected improvements in program and customer diversity as a result of the $2 billion, largely debt financed acquisition, S&P said.

However, the improved business risk profile is offset somewhat by the increase in leverage and deterioration in cash flow protection measures, the agency added.

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