TEXT-S&P affirms Delphi Automotive term loan 'BBB' rating
Sept 19 - Standard & Poor's Ratings Services said today that it is affirming its 'BBB' issue rating on Delphi Corp.'s term loan A after the company's announcement that an amended and restated credit agreement will incorporate a $363 million add-on to the loan that brings the funded amount to $573 million from $210 million. The 'BB+' corporate credit rating on Delphi Automotive PLC remains unchanged. We view the incremental leverage and interest expense as minimal. The proceeds of the additional term loan borrowings will be used to partly pay for the company's recent acquisition of FCI's Motorized Vehicles Division. At the same time, Delphi Automotive PLC's announcement of a $750 million share repurchase authorization has no effect on the ratings because we expect the company to take a measured approach to repurchases, to generate at least that much free cash flow this year and again in 2013, and for the company's leverage to remain in line with the rating. The borrower under the amended and restated credit agreement is Delphi Corp. The 'BBB' rating on Delphi Corp.'s senior secured credit facility has a recovery rating of '1', indicating our expectation that lenders would receive very high (90% to 100%) recovery in the event of default. The 'BB+' rating on Delphi's senior unsecured notes remains unchanged with a recovery rating of '3', indicating our expectation that lenders would receive meaningful (50% to 70%) recovery in the event of a default. The rating is unchanged because the increased amount of funded senior secured debt in the capital structure as a result of the add-on to term loan A will be quickly amortized. The 'BB+' corporate credit rating on Delphi Automotive reflects the company's "fair" business risk profile and "intermediate" financial risk profile, which incorporate substantial exposure to the highly cyclical light-vehicle market. For the full corporate rating rationale, please see our latest research report on Delphi, published Aug. 24, 2012. For further details, please see the recovery report on Delphi Corp. to be published following this release, on RatingsDirect. RATINGS LIST Delphi Automotive PLC Corporate Credit Rating BB+/Stable/-- Ratings Affirmed Delphi Corp. Senior Secured $573 mil term loan A BBB Recovery Rating 1 Complete ratings information is available to subscribers of RatingsDirect on the Global Credit Portal at www.globalcreditportal.com. All ratings affected by this rating action can be found on Standard & Poor's public Web site at www.standardandpoors.com. Use the Ratings search box located in the left column.
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