Fitch rates Celestica

Fitch Ratings said it initiated coverage of Celestica Inc. by assigning the following ratings: issuer default rating of BB-, unsecured credit facility at BB- and senior subordinated debt at B+.

The outlook is stable.

Fitch said the ratings and outlook reflect Celestica's relatively weak but improved operating performance and concentration to traditional end markets, which are characterized by more mature growth prospects and have resulted in Celestica's greater historical operating performance volatility than its more diversified competitors.

Furthermore, Fitch said it expects EBIT margins for the electronics manufacturing services industry will remain thin, particularly for companies with traditional models that focus primarily on contract design and manufacturing activities.

The agency added ratings strengths center on the company's historically conservative capital structure, improved leverage ratios mostly from higher profitability but also recent debt reduction, adequate liquidity position with limited near-term debt maturities.

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