Moody's downgrades Freescale

Moody's Investors Service said it lowered the ratings of Freescale Semiconductor, Inc. and maintained the negative outlook. Moody's also affirmed the speculative grade liquidity rating at SGL-1, concluding the review for downgrade that began on Oct. 24.

Moody's downgraded $750 million senior secured revolving credit facility due 2012 to Ba1 (LGD2, 17%) from Baa3 (LGD2, 16%), $3.5 billion senior secured term loan B facility due 2013 to Ba1 (LGD2, 17%) from Baa3 (LGD2, 16%), $2.35 billion senior unsecured notes due 2014 to B2 (LGD4, 65%) from B1 (LGD4, 63%), $500 million senior unsecured floating-rate notes due 2014 to B2 (LGD4, 65%) from B1 (LGD4, 63%), $1.5 billion senior unsecured toggle notes due 2014 to B2 (LGD4, 65%) from B1 (LGD4, 63%) and $1.6 billion senior subordinated unsecured notes due 2016 to B3 (LGD6, 92%) from B2 (LGD6, 91%).

The downgrade reflects Freescale's weakened credit profile, Moody's said, and incorporates expectations of continued weakness, moderating demand and lackluster revenue growth in some segments.

The ratings could be downgraded if the company's adjusted debt-to-EBITDA rises above 6 times for an extended period, the agency said.

The B1 rating also recognizes market leadership positions and rich product portfolio, diversified revenue base, improved operating efficiency since the Motorola spin-off and a defensive operating model that allows the company to quickly cut expenses, according to the agency.

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