S&P revises ratings on tech hardware companies

S&P said it reviewed several of its corporate issue-level and recovery ratings in the U.S. technology hardware sector.

The agency said it considered these issue ratings as under criteria observation (UCO) after it published the revised recovery ratings criteria Dec. 7.

With the review complete, S&P said it removed the UCO designation from these issue-level ratings, raised some of the companies and lowered others’ ratings.

Except for two of the downgrades, these actions resulted from a revision to the recovery rating on the debt instrument, the agency said.

S&P also said it lowered two of the issue-level ratings even though the recovery ratings are unchanged because the agency said it now caps issue-level ratings at BBB- when the issuer is rated BB or BB+, regardless of the recovery rating.

This change de-emphasizes the weight that recovery plays in up-notching issue ratings for issuers near the investment-grade threshold, the agency said.

This is because recovery is a smaller component of credit risk when default risk is more remote and because recovery prospects might be less predictable for these issuers, S&P said.

These rating actions stem solely from the application of the revised recovery criteria and do not reflect any change in an assessment of the corporate credit ratings on the issuers of the affected debt issues.

CommScope Inc.’s and CommScope Technologies LLC’s senior secured rating was upgraded to BB+ from BB with recovery rating to 1 from 2L and its senior unsecured rating to B+ from B with recovery rating to 5H from 6.

Omnitracs LLC’s and Coronado Holdings LLC’s senior secured rating was upgraded to B+ from B with recovery rating to 2L from 3H.

Riverbed Technology Inc.’s senior secured rating was upgraded to B+ from B with recovery rating to 2L from 3H. Its senior unsecured rating was affirmed at CCC+ and its recovery rating was affirmed at 6.

Dell International LLC’s senior secured rating was downgraded to BBB- from BBB with its recovery rating revised to 2L from 2L.

Eastman Kodak Co.’s senior secured rating was affirmed at B- and its recovery rating was revised to 3L from 4L.

NCR Corp.’s senior secured rating was downgraded to BBB- from BBB with its recovery rating was unchanged at 1.

Dell International LLC’s senior secured rating was downgraded to BBB- from BBB and its recovery rating was revised to 2L from 1.

Dell Inc.’s senior unsecured rating was affirmed at BB- and its recovery rating was unchanged at 6.

4L Technologies Inc.’s senior secured rating was affirmed at B and its recovery rating was revised to 4H from 3L.

The senior secured ratings on Diamond 1 Finance Corp., Diamond 2 Finance Corp. and EMC Corp. were affirmed at BBB- with recovery rating of 2L and their senior unsecured rating was affirmed at BB with recovery rating of 5H.

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