Moody’s cuts Western Digital to junk

Moody's Investors Service said it downgraded Western Digital Corp.'s senior unsecured ratings to Ba2 from Baa3, the ratings for its senior secured notes, previously senior unsecured, to Ba1 from Baa3, and concurrently assigned a Ba1 corporate family rating, a Ba1-PD probability of default rating and an SGL-2 speculative grade liquidity rating.

The agency also placed all the ratings under review for further downgrade.

The downgrade and review follow WDC's announcement that it has finished its strategic review and plans to pursue the spinoff of its flash-based product segment to its shareholders, the agency said. WDC expects to operate the hard disk drive segment and flash business as separate publicly-held companies after the spinoff, which is expected to close in the second half of 2024, subject to various conditions.

The outlook was placed under review. Previously, the outlook was negative.

In a press release, Moody's analyst Raj Joshi said, "Although we believe that WDC's revenues and operating income (non-GAAP basis) have troughed, WDC's operating income (non-GAAP basis) is unlikely to turn positive before the fiscal quarter ending June 2024."

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