Fitch cuts Seagate, rates notes BB+

Fitch Ratings said it downgraded the ratings, including the long-term issuer default ratings, for Seagate Technology plc and its wholly owned subsidiary, Seagate HDD Cayman, to BB+ from BBB- and assigned recovery ratings of RR4 to the outstanding senior unsecured debt.

Fitch has also assigned BB+/RR4 ratings to Seagate HDD Cayman’s proposed senior unsecured notes offering. Finally, Fitch revised the outlook to negative from stable. The downgrades and outlook change affect $5.7 billion of debt, including the undrawn $1.5 billion revolving credit facility.

“The rating reflects Fitch’s expectation for structurally higher debt levels to support more aggressive capital returns, resulting in total debt to operating EBITDA exceeding Fitch’s 2.5x negative rating sensitivity over at least the near term,” the agency said in a press release.

Fitch said it expects Seagate to use the proceeds to accelerate share repurchases under its outstanding authorization. Seagate’s board of directors recently upsized the authorization by $3 billion to $4.2 billion in aggregate.

“The outlook incorporates the potential for higher leverage, given macroeconomic uncertainty and Seagate’s flattish top-line guidance,” the agency said.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.