Moody's cuts Sanmina

Moody's Investors Service said it downgraded Sanmina SCI Corp.'s corporate family and probability-of-default ratings to B1 from Ba3.

Also lowered were the $180 million senior floating rate notes due 2010 and $300 million senior floating rate notes due 2014 to B1 from Ba3 (LGD3, 47%), and the $400 million senior subordinated notes due 2013 and $600 million senior subordinated notes due 2016 to B3 from B2 (LGD5, 85%).

The action concludes Moody's review for downgrade that began on Aug. 20, which was triggered by the company's continued poor operating results, reflecting weak demand from original equipment manufacturers for its products and operating inefficiencies in the components business.

The outlook is stable.

The downgrade to B1 reflects the company's continued weak fundamentals, sub-par asset utilization and ongoing business restructurings and heightened competition from industry consolidation, according to the agency.

Sanmina has an adjusted debt-to-EBITDA ratio of 6.1 times.

Supporting the B1 rating are solid working capital management and free cash flow generation and its strength in some of the newer industries such as medical and defense, Moody's said.

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