S&P rates Seagate notes BB+

Standard & Poor's said it assigned its BB+ issue level rating to the proposed $430 million of senior secured, second-priority notes to be issued by Seagate Technology International, two notches above the corporate credit rating (BB-/negative) of its parent, Seagate Technology.

The notes will be guaranteed by Seagate Technology and Seagate Technology HDD Holdings, the agency said, noting that the recovery rating is a 1.

At the same time, S&P said that the issue level ratings of senior unsecured debt at Seagate Technology HDD Holdings were lowered to B+ from BB-, reflecting the revision of the recovery ratings on those issues to five from 4.

Proceeds from the new debt are expected to fund the refinancing of a maturing $300 million obligation and for general corporate purposes, the agency added.

"The ratings on Seagate reflect volatile industry dynamics in the hard-drive industry, including periods of aggressive product pricing and excess supply (as it is currently experiencing), substantial competition, and a high degree of product-cycle risk," said S&P credit analyst Lucy Patricola.

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