Fitch cuts Viavi, rates loan BB+

Fitch Ratings said it downgraded the long-term issuer default rating and senior unsecured notes of Viavi Solutions Inc. to BB- and BB-/RR4 from BB and BB/RR4, respectively. The agency also assigned BB+/RR2 ratings to the planned seven-year term loan B.

Viavi agreed to buy Spirent Communications plc in an all-cash deal valued at about $1.28 billion.

“The transaction adds complementary test and measurement offerings to Viavi, provides diversification and new growth opportunities, as well as builds out Viavi's R&D capabilities. Despite the benefits of the acquisition to Viavi's business profile, the proposed acquisition financing structure weakens its financial profile with Fitch forecasting pro forma EBITDA leverage approaching 6x during 2025,” Fitch said in a press release.

Viavi’s EBITDA leverage is expected to be 5.8x in fiscal 2025 due to the financing. “The downgrade is largely attributable to the increase in EBITDA leverage to higher than Viavi's previous 3.5x EBITDA leverage downgrade sensitivity,” the agency said.

The outlook is stable.

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