S&P upgrades Cohu

S&P said it upped its ratings on Cohu Inc. and its first-lien term loan to BB- from B+. The loan’s 3 recovery rating is unchanged.

“The upgrade reflects our expectation that Cohu will sustain its improvements in profitability and credit metrics, keeping leverage under 1.5x over the next 12 months even as the semiconductor industry faces a significant downturn. Cohu has reduced leverage considerably over the past two years, bringing S&P Global Ratings'-adjusted leverage to about 0.7x as of Dec. 31, 2022, down from 4.5x in 2020,” S&P said in a press release.

The agency noted Cohu’s revenues fell in 2022 and it forecasts “a further decline in 2023, better expense management and lower leverage will mitigate the impact on credit metrics compared with the 2019 downturn.”

The outlook is stable.

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