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S&P lowers Renesas Electronics
S&P said it lowered the long-term issuer credit rating on Renesas Electronics Corp. to BBB-, along with the its short-term issuer credit rating to A-3.
The agency also said it lowered both ratings by one notch and removed them from CreditWatch, where they were placed with negative implications in September 2018.
The outlook is negative.
The negative watch followed news that the company would acquire Integrated Device Technology Inc., S&P said.
The downgrades reflect a view that the degree to which the acquisition will worsen the company's finances far outweighs the modest business benefits it will bring, the agency explained.
S&P said it thinks that its key financial ratios are likely to worsen materially because Renesas financed the acquisition largely with debt.
The ratios are unlikely to recover swiftly, even if it repays the debt with relatively strong levels of free operating cash flow, the agency said.
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