Moody’s drops Wesco, debt to B1

Moody's Investors Service said it downgraded Wesco Aircraft Hardware Corp.’s corporate family rating to B1 from Ba3, probability of default rating to B2-PD from Ba3-PD and senior secured bank debt to B1 from Ba3.

The outlook is stable.

Moody’s said the downgrades reflect its expectation that Wesco’s revenue and earnings will continue to trail expectations in the aftermath of its 2014 acquisition of Haas Inc. The debt-financed, fully priced, transaction resulted in a material increase in leverage (debt-to-EBITDA increased to 5 times from 3 times) and a significant weakening of Wesco's credit metrics.

Thus far, the integration of Haas has proceeded at a rate that is slower than expected and the company has been unable to achieve the hoped-for revenue synergies and profitability measures. These challenges have resulted in a rate of deleveraging that will remain much slower than anticipated, the agency said. As a result, Wesco's credit profile will be more in keeping with the B1 rating category.

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