S&P raises Ciena, rates loan BB+

S&P said it raised its corporate credit rating on Ciena Corp. to BB- from B+.

The outlook is stable.

At the same time, the agency assigned its BB+ issue-level rating with a recovery rating of 1 to the company's new $400 million senior secured term loan. The 1 recovery rating indicates an expectation for very high recovery (90%-100%) of principal in the event of a payment default.

S&P also raised its issue-level rating on the company's senior unsecured debt to B+ from B. The 5 recovery rating indicates that unsecured creditors can expect modest (10%-30%; in the lower half of the range) recovery in the event of a default.

"The rating action reflects our view of Ciena's strong liquidity, with more than $1 billion in cash and equivalents, and improved financial metrics, based on adjusted gross leverage under the mid-3x area, pro forma for the proposed $400 million term loan B, and improving further to under the 3x area after the 2017 convertible matures," S&P credit analyst Minesh Shilotri said in a news release.

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