S&P rates Engility loan BB-, notes B-

S&P said it assigned a BB- rating and 2 recovery rating to the proposed $965 million first-lien credit facility issued by Engility Holdings Inc.'s subsidiary Engility Corp., which is composed of a $165 million revolving credit facility due 2021, $200 million term loan B1 due 2020 and $600 million term loan B2 due 2023.

The 2 recovery rating indicates 70% to 90% expected default recovery.

S&P also said it assigned a B- rating and 6 recovery rating to Engility's proposed $380 million unsecured notes. The 6 recovery rating indicates 0 to 10% expected default recovery.

The agency also said it affirmed the B+ corporate credit rating on Engility Holdings.

The outlook is stable.

The ratings reflect the slightly positive impact that the proposed refinancing will have on the company's credit ratios, which have been weaker than expected in recent quarters, S&P said.

While the proposed refinancing should help improve Engility's credit ratios, it will not have enough of an impact to lead to a revision of the company's financial risk profile, the agency said.

The refinancing will reduce the company's interest costs by about $15 million to $20 million per year due to the high coupons on its existing debt, freeing up more cash flow for debt repayment, S&P said.

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