Moody's rates Sanmina notes B1

Moody's Investors Service said it assigned a B1 (LGD-4, 56%) rating to Sanmina-SCI Corp.'s proposed $500 million of eight-year senior notes due 2019 and affirmed the B1 corporate family and probability of default ratings, Ba3 (LGD-3, 41%) $257 million of senior floating-rate notes due 2014, B2 (LGD-5, 75%) $600 million of 8¼% senior subordinated notes due 2016 and SGL-2 speculative-grade liquidity rating.

The outlook is positive.

Proceeds together with cash are expected to be used to retire the 6¾% senior subordinated notes due 2013 and to redeem a portion of the 8¼% senior subordinated notes due 2016 via a tender offer.

The ratings consider a shift to higher margin proprietary products, improved operating efficiencies as well as the company's strength in newer industry segments such as medical, renewable energy and aerospace/defense, the agency added.

The ratings are constrained by the company's smaller size, historical operating/free cash flow margin volatility and moderately higher financial leverage compared to its larger more vertically-integrated electronic manufacturing services peers, the agency said.

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