Moody's upgrades Avago

Moody's Investors Service said it upgraded Avago Technologies Finance Pte. Ltd.'s corporate family and probability-of-default ratings to B1 from B2, $375 million senior secured revolving credit facility due 2011 to Ba1 (LGD1, 8%) from Ba2, $453 million senior unsecured fixed- and floating-rate notes due 2013 to B1 (LGD4, 51%) from B2 and $250 million senior unsecured subordinated notes due 2015 to B3 (LGD5, 89%) from Caa1. The SGL-1 speculative-grade liquidity rating was affirmed.

The outlook remains positive.

The agency said the upgrade reflects Avago's continued improvement in market position, operating profile and financial performance, despite current weakness in the company's addressable end markets. It also considers good internal execution toward building a sustainable business model with a low operating cost structure since the November 2005 leveraged buyout and spinoff from Agilent Technologies.

The positive outlook reflects Moody's expectations that Avago will continue to deliver margin expansion as a result of market share gains driven by increased design win activity and product introductions.

The debt-to-EBITDA ratio (Moody's adjusted) was 2.3 times for the last 12 months ended in the second quarter, compared with 3.1 times at the fiscal year-end on Oct. 31, 2007.

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