Moody's rates Brocade loans Ba2

Moody's Investors Service said it assigned Ba3 corporate family and probability-of-default ratings to Brocade Communication Systems, Inc. pending its $2.9 billion acquisition of Foundry Networks Inc.

The agency also assigned Ba2 (LGD2, 28%) ratings to the $1.125 billion senior secured loan facilities used to finance the acquisition and a liquidity rating of SGL-1.

The outlook is stable.

Moody's said the Ba3 corporate family rating largely reflects the debt levels used to finance the acquisition as well as the risks associated with the integration of Foundry and the evolving nature of the networking industry.

Pro forma trailing leverage is expected to be about 3.8 times.

Ratings are supported by Brocade's leadership position and Foundry's niche position as well as the strong cash generating capabilities of the combined entity, the agency noted.

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