S&P rates Synaptics loan BB-, cuts notes

S&P said it rated Synaptics Inc.’s new $600 million term loan BB- with a 3 recovery rating. The agency also trimmed Synaptics’ senior unsecured notes to B+ from BB- and lowered the recovery rating to 5 from 4, citing the subordination to the loan.

“We calculate pro forma leverage of about 2.3x at transaction close and forecast a modest decline to about 2x by the end of fiscal 2023. With the additional debt to fund the acquisition, we expect leverage to be above 2x in the next 18 months, which is higher than our previous forecast,” the agency said in a press release.

S&P also noted the company redeemed its $525 million of convertible notes so the pro forma capital structure consists of $400 million of notes and the new $600 million loan.

Synaptics plans to use cash and the loan proceeds for its acquisition of DSP Group Inc.

The outlook is stable.

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