S&P ups Rocket Software

S&P said it raised its corporate credit rating on Rocket Software Inc. to B+ from B. The outlook is stable.

At the same time, S&P said it raised the issue-level rating on the company's senior secured first-lien term loan and $35 million revolving credit facility to BB- from B+. The 2 recovery rating indicates an expectation of substantial (70%-90%; rounded estimate: 70%) recovery in the event of a payment default.

S&P also raised its issue-level rating on the company's $195 million second-lien term loan to B from B-. The 5 recovery rating indicates an expectation for modest (10%-30%; rounded estimate: 10%) recovery of principal in the event of a payment default.

“The upgrade reflects the company's consistent execution of its financial policy, the expansion of the breadth of its product portfolio, and our view that Rocket's financial profile is more conservative than most other private equity owned software companies which are rated B or B- and which often have leverage in the 7x to 9x range or higher,” S&P said in a news release.

“The ratings also reflect Rocket's leverage in the 5x area (pro forma for the proposed acquisitions and debt issuance) following the close of the transaction.”

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