Moody's cuts CEVA subordinated bonds

Moody's Investors Service said it downgraded CEVA Group plc's probability-of-default rating to Ca from Caa1 and its senior subordinated regular bonds to Ca (LGD4, 64%) from Caa3.

The remaining ratings are unchanged, including the Caa1 corporate family rating, the B1 (LGD1, 2%) senior secured bank credit facility and the Caa2 (LGD2, 29%) senior secured second-lien bonds and senior unsecured bonds.

The outlook is negative.

The downgrade follows the company's offer to exchange part of its existing senior unsecured notes due 2014, senior subordinated notes due 2016 and senior unsecured bridge loan for up to €210 million of new second-priority secured notes, which Moody's views as a distressed exchange and a default.

The agency said the Caa1 corporate family rating reflects the relatively high recovery rate being offered and Moody's expectation that once the offer is complete, the company will remain at least in line with the Caa1 level.

The negative outlook reflects the agency's expectations that, even in the case of a successful completion of the offer, difficult market conditions are likely to result in key credit metrics remaining weak over the intermediate term with increasing pressure on the company's liquidity situation.

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