Moody's assigns Baa2 to Heico

Moody's Investor Service said it assigned a Baa2 issuer rating to Heico Corp.

“The assignment of the Baa2 rating reflects Moody's expectation for material deleveraging following Heico's completion of its Wencor acquisition. It also reflects Heico's good track record for completing such deals with little operating disruption. Governance is a key rating consideration. Moody's anticipates a conservative financial policy with a near-term focus on debt reduction,” the agency said in a press release.

“The acquisition of Wencor will increase pro forma Moody's adjusted debt to EBITDA to 3.3x from 1.3x. Heico's incurrence of significantly more leverage comes at a time of growing economic uncertainty and the increased debt burden comes near the peak of the current interest rate cycle. As such, over the next 18-24 months, Moody's expects Heico to direct all free cash flow towards debt reduction until debt to EBITDA is around or below 2x,” the agency said.

The outlook is stable.

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