S&P upgrades TransDigm

S&P said it raised the corporate credit rating on TransDigm Inc. to B+ from B.

The outlook is stable.

The agency also said it raised the rating on the company's first-lien term loans to B+ from B.

The 3 recovery rating is unchanged, indicating 50% to 70% expected default recovery.

S&P also said it raised the ratings on the company's subordinated notes to B- from CCC+.

The 6 recovery rating is unchanged, indicating 0 to 10% expected default recovery.

The upgrades reflect a belief that TransDigm's acquisitions and organic growth have strengthened the company's competitive position and scale while it has maintained very high margins, S&P said.

Acquisitions and modest organic growth have led the company's revenue to increase to about $3.2 billion in 2016 from $1.2 billion in 2011, providing TransDigm with better scale than many of its similarly rated peers, the agency explained.

However, leverage is expected to remain high with a debt-to-EBITDA ratio of 6.5x to 7x as the company continues to aggressively pursue debt-financed acquisitions and shareholder rewards, S&P said.

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