S&P downgrades Seagate

Standard & Poor's said it lowered Seagate Technology HDD Holdings' corporate credit rating to BB- from BB+ and its senior unsecured ratings to BB- with a recovery rating of 3 from BB+ with a recovery rating of 4. The senior unsecured rating on Maxtor Corp. was lowered to B with a recovery rating of 6 from BB+.

The outlook is negative.

The downgrade follows the company's announcement that it expects revenues to decline sequentially in a 14%-24% range in the December quarter and that operating results will be lower than previously expected. S&P said the drop in earnings will pressure a bank loan covenant that calls for a minimum net debt-to-EBITDA ratio of 1.5 times. The company currently is comfortably in compliance with an estimated ratio of 0.4 times, but the agency said the expected weakness in December earnings likely will significantly diminish headroom.

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