Moody’s assigns Ba1 to Phinia, loans

Moody’s Investors Service said it assigned first-time ratings to Phinia Inc., including a Ba1 corporate family rating and a Ba1-PD probability of default rating. The agency also assigned Ba1 ratings to the company's planned senior secured credit facility, consisting of a revolving credit facility, term loan A and term loan B. The outlook is stable. At the same time, Moody's assigned an SGL-2 speculative grade liquidity rating.

BorgWarner Inc. plans to spin off its fuel systems and after-market segments to Phinia, which will be a new publicly traded company. The loans will be used to make a payment to BorgWarner.

“The ratings reflect strong margins from high-value add products manufactured in lower cost locales, good geographic, customer and end-market diversity and stable and recurring revenue provided by the automotive aftermarket segment. Moody's expects annual organic revenue growth of at least 2%, an EBITA margin around 10% and annual free cash flow near $150 million. Debt-to-EBITDA is anticipated to remain below 2.5x even with occasional bolt-on acquisitions,” the agency said in a press release.

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