S&P affirms TransDigm on loan add-on

S&P said it affirmed all of its issue-level ratings on TransDigm Inc., including the B issue-level rating on the company's term loan F due May 2023.

TransDigm plans to issue a $650 million add-on to the term loan and will use the proceeds, along with cash on hand, to pay an up to $1.5 billion dividend.

The increased debt and dividend are in line with the agency’s expectations for the rating and this transaction does not change our forecast that the company will maintain a debt-to-EBITDA metric of 6 times to 6.5 times in fiscal-year 2017.

S&P said the ratings reflect TransDigm’s above-average profit margins, leading positions in the niche markets for engineered aircraft components, good product diversity, weak credit metrics and high leverage (as the company uses its excess cash to fund acquisitions and large periodic special dividends).

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