Fitch upgrades ASPropulsion, Aero Invest notes

Fitch Ratings said it upgraded ASPropulsion Capital BV's €200 million 9 5/8% senior notes due 2013 to BB from B, upgraded Aero Invest 1 SA's €375 million floating-rate senior payment-in-kind notes due 2015 to B from B- and affirmed Avio SpA's B+ issuer default rating, B short-term rating and BB senior secured debt rating.

The agency also assigned R2 and R5 recovery ratings to the 9 5/8% notes and floating-rate notes, respectively, and an R2 recovery rating to the senior secured debt. The outlook is stable.

The recovery ratings reflect Fitch's view that in a distressed scenario, a liquidation of the company assets is most likely to result in the greatest destruction of value for all parties.

Fitch said the B+ issuer default rating reflects Avio's established market position within the European aerospace industry, globally recognized technical expertise, long-standing client relationships, strategic importance to the Italian government and the long-term nature of the projects in which it participates.

These are offset by the company's relatively modest size, leveraged capital structure, high exposure to the cyclical civil aerospace industry, heavy customer concentration and the risk of major contract reductions or delays, the agency said.

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