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January 11, 2008 |
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AVAGO TECH: S&P Raises Corporate Credit Rating to 'BB-' from 'B' Standard & Poor's Ratings Services removed its ratings on San Jose, Calif.- and Singapore-based Avago Technologies Finance Pte. Ltd. and related entities, from CreditWatch, where they were placed on Sept. 19, 2007, with positive implications, and raised the company's corporate credit rating to 'BB-' from 'B'. This rating action includes an upgrade of the company's senior secured rating to 'BB-' on its revolving credit facility, which was recently upsized from US$250 million to US$375 million. The recovery rating remains '1', indicating the expectation of a very high (90%-100%) recovery of principal in the event of a payment default. The outlook is stable. "The rating action follows the company's steps to delever, while its operating trends have remained stable over the last several quarters," said Standard & Poor's credit analyst Lucy Patricola. "The ratings reflect Avago Technologies' challenges in growing its portfolio of sole-sourced, leading-edge technology semiconductors; modest free cash flow; and short operating track record as an independent company. These factors are partially offset by the company's broad product line--which produces stable revenues and earnings with minimal product, market, or customer concentration--and leverage that is moderate for the rating." The outlook is stable. A broad-based portfolio affords the company stability in its operating trends and downside protection. Upside potential is constrained by its niche focus and lack of revenue growth. |
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