S&P rates Avaya loan B

S&P said it assigned its B corporate credit rating to Avaya Inc. The outlook is stable.

At the same time, S&P assigned a B issue-level rating and 3 recovery rating to the company's $2.925 billion first-lien term loan B due 2024. The 3 recovery rating indicates an expectation of meaningful (50%-70%; rounded estimate: 50%) recovery in the event of a default.

“The rating on Avaya reflects key credit risks including sharp revenue declines in its UC business, which still represents a majority of the company's revenue, potential reputational damage and loss of key personnel following the bankruptcy, intense competition from larger companies such as Cisco and Microsoft, and the threat of new disruptive technologies to Avaya's core businesses,” S&P said in a news release.

“Partially offsetting these risks are Avaya's leading market position in most of its core markets, modest growth prospects for the CC market, relatively stable EBITDA margins despite revenue declines, and the company's meaningful scale with roughly $3 billion in annual revenues.”

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