S&P lifts H3C loan to BB+

Standard & Poor's said it raised the recovery rating on H3C Holdings Ltd.'s $430 million senior secured credit facility to 1 from 2 and the bank loan rating to BB+ from BB and affirmed the long-term corporate credit rating at BB-.

The outlook was revised to positive from stable.

The agency said it revised the outlook to reflect H3C's improving credit metrics. The company's performance in 2008 was satisfactory despite the currently weak global market conditions that began in the second half of that year, S&P said, and it has continued to reduce its debt at a fast pace.

The revised bank loan rating reflects the agency's higher recovery expectations.

The rating on H3C reflects the weak business risk profile of parent 3Com Corp., intense competition and customer and geographic concentration, S&P said.

These weaknesses are partly offset by the company's good profitability and good market position and good growth potential in China, the agency added.

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