Fitch gives Viavi, notes BB

Fitch Ratings said it gave a first-time long-term issuer default rating of BB to Viavi Solutions Inc. Fitch also rated Viavi’s upcoming senior unsecured notes BB with an RR4 recovery rating.

Viavi's note offering follows it exchanging $275 million of senior convertible notes due 2023 and 2024 with certain holders for $197 million in cash and 10.6 million shares of common stock. The outlook is stable.

“The rating and outlook reflect Viavi's market position, with established leadership in key wireless and wireline test and measurement sub-sectors. These markets are set to benefit from key secular trends, including increased fiber penetration, 5G network deployment, and increased 3D sensing applications in mobile phones and automotive, which will support growth in the low- to mid-single digit range. Corresponding operating leverage should help maintain a 25%+ operating EBITDA margin and high-single digit FCF generation that is more consistent with a higher rating,” Fitch said in a press release.

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