Fitch rates Western Digital notes, facilities

Fitch Ratings said it affirmed the ratings for Western Digital Corp., including the long-term issuer default rating at BB+, and revised the outlook to positive from stable.

The agency also assigned the following ratings related to the company's refinancing transactions: $2.3 billion eight-year senior unsecured notes BB+/RR4; $1.5 billion five-year extended revolving credit facility BBB-/RR1; and $5 billion five-year increased and extended term loan A BBB-/RR1.

The actions affect $12.8 billion of total debt, pro forma for these announced refinancing transactions and including the undrawn $1.5 billion revolver.

Fitch said the outlook revision reflects its expectations for solid operating performance through the cycle, driven by Western Digital's strong technology and positions in both hard disk drives (HDD) and solid state drive (SSD) markets, as well as more competitive cost structure from past restructuring.

“Fitch expects FCF will remain cyclical and could be $2 billion to $5 billion in any given year but should average more than $3 billion over the intermediate-term. Ongoing debt reduction from FCF also should enable Western Digital to achieve their long-term total leverage target of 1.5x in calendar 2018,” the agency added in a news release.

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