S&P rates Applied Materials A-2

Standard & Poor's said it assigned Applied Materials Inc.'s $1 billion 4(2) commercial paper program an A-2 short-term rating.

The A- long-term corporate credit rating is unchanged.

The outlook is stable.

Proceeds will be used to help fund its $4.9 billion acquisition of Varian Semiconductor.

Ratings reflect the company's leading competitive position across multiple semiconductor equipment product categories, pro forma adjusted total debt-to-EBITDA ratio in the low-1x area and significant cash balances as of Applied's second quarter ended May 1, the agency said.

Applied is expected to use free cash flow to reduce leverage below 1x within 18 months after the transaction, through a reduction of its CP balances, to provide an additional leverage buffer, given the semiconductor industry's inherent operating cyclicality, the agency noted.

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