Moody's slashes CommScope

Moody's Ratings said it downgraded CommScope Holding Co., Inc.'s ratings including the corporate family rating to Caa2 from B3 and the probability of default rating to Caa3-PD from B3-PD. The agency cut the senior secured term loan and notes at CommScope's subsidiary, CommScope, Inc. to B3 from B2 and the senior unsecured notes to Ca from Caa2, while the senior unsecured notes at CommScope's other subsidiary, CommScope Technologies LLC were downgraded to Ca from Caa2. CommScope's speculative grade liquidity rating was downgraded to SGL-4 from SGL-3.

An increasing risk of capital restructuring, including a distressed exchange of some or all of the company’s debt sparked the downgrade, Moody’s said. CommScope’s senior notes are due in June 2025 and secured debt in March and April of 2026.

“The continued weak operating performance and uncertainty around the timing of a recovery in various operating segments is also a negative factor. CommScope's revenues and EBITDA continued to decline during Q4 2023 with weakness across all segments including the networking, intelligent cellular and security solutions (NICS) business which had been a source of strength earlier in 2023,” the agency said.

On the positive side, Moody's said it does see an eventual recovery in CommScope's different segments, but uncertainty over when and the pace of those improvements could potentially lead to CommScope's credit metrics clinging above the 9x range (including Moody's standard adjustments) in 2024.

The outlooks are negative.

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