S&P rates TransDigm loans B+, notes B-

S&P said it assigned its B+ issue-level and 3 recovery ratings to TransDigm Inc.'s proposed $2.196 billion first-lien term loan E due 2025 and $3.637 billion first-lien term loan F due 2023.

The 3 recovery rating indicates an expectation for meaningful (50%-70%; rounded estimate: 60%) recovery in a default scenario.

The agency also assigned its B- issue-level rating to TransDigm's proposed $500 million senior subordinated notes due 2026 that will be issued by TransDigm UK Holdings plc. The 6 recovery rating indicates negligible (0%-10%; rounded estimate: 0%) recovery.

All of the issue-level ratings were affirmed, and the corporate credit rating is unchanged.

TransDigm expects to use proceeds from the new debt to refinance its $1.496 billion outstanding term loan E due 2022 and its $3.637 billion outstanding term loan F due 2023, and to add cash to the balance sheet after $525 million was used for the acquisition of Extant Components Group Holdings Inc.

“While this transaction will increase TransDigm's leverage somewhat, we do not believe that it will significantly alter the company's credit metrics,” S&P said in a news release.

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