Fitch to rate Sanmina notes BB

Fitch Ratings said it expects to rate Sanmina-SCI Corp.'s offering of $500 million of senior notes at BB/RR2 and affirmed Sanmina's issuer default rating at B+ and senior secured credit facility at BB+/RR1 and downgraded its senior notes downgraded to BB/RR2 from BB+/RR1 and senior subordinated debt to B-/RR6 from B+/RR4.

The outlook is stable.

Proceeds from the offering will be used to repay all $380 million of outstanding 6¾% senior subordinated notes due February 2013 and up to $200 million of 8 1/8% senior subordinated notes due March 2016 of which $600 million are currently outstanding.

The downgrade of the senior notes and subordinated notes reflect the change in recovery rate expectations following the higher mix of senior notes from the proposed refinancing, the agency said.

The ratings consider Sanmina's position as one of the larger global electronics manufacturing services providers with higher than industry average exposure to complex manufacturing services, the countercyclical nature of working capital cash flows inherent in the electronics manufacturing services industry and the long-term opportunity for revenue growth in non-traditional markets, the agency added.

The ratings consider the expectation that the electronics manufacturing services market will remain highly competitive with continued pressure on profitability across all North American tier one competitors and Sanmina's downsized business that is significantly smaller than leading tier one service providers in a market where scale is of significant importance, the agency said.

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