S&P downgrades Macom

S&P said it lowered the rating on M/A-COM Technology Solutions Holdings Inc.'s (Macom) first-lien secured credit facilities to B+ from BB-.

The agency also said it revised the recovery rating on the first-lien facilities to 3 from 2.

The 3 recovery rating indicates 50% to 70% expected default recovery.

The actions follow news that the company plans $250 million add-on transaction, S&P said.

The company’s B+ corporate credit rating and stable outlook are unchanged.

This transaction will raise Macom’s total funded debt to about $520 million, S&P said, and the company's adjusted leverage will increase to the mid-4x range from about 3x as of the third-quarter that ended July 2016.

But the agency said it expects leverage to rapidly decline to the 3x range as revenues continue to grow at a greater than 15% annual rate and EBITDA margins expand modestly from new product introductions.

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