Fitch cuts Sanmina-SCI to B

Fitch Ratings said it downgraded the senior subordinated debt of Sanmina-SCI Corp. to B/RR5 from B+/RR4 and assigned a BB+/RR1 rating to its $600 million term loan expiring January 2008.

The company's B+ issuer default rating and BB+/RR1 first-lien senior secured credit facility, along with its senior secured and senior subordinated ratings, remain on Rating Watch negative.

Fitch said its action affects about $1.6 billion of total debt securities, pro forma for the issuance of the $600 million term loan and redemption of $525 million of subordinated convertible debentures due March 2007.

The agency said its downgrade reflects the company's layering of $600 million of senior unsecured debt on top of the senior subordinated debt, resulting in lower recovery prospects for the subordinated debt. Fitch estimated that the recovery for the subordinated notes would decline to 11%-30% from 31%-50% prior to the refinancing, resulting in an RR5 recovery rating.

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