S&P gives Digi, loan B ratings

S&P said it assigned B ratings to Digi International Inc. and its planned $350 million senior secured term loan B due 2028. The loan’s recovery rating is 3, indicating an expectation of meaningful (50%-70%; rounded estimate: 60%) recovery in default.

“The ratings on Digi International reflect our expectation for high leverage following its acquisition of Ventus Global Network Solutions but solid business prospects because of growth opportunities in IoT connectivity. We expect the transaction to result in elevated adjusted leverage of about 4.9x in 2022, although we believe the company has good prospects to reduce leverage to the low-4x area by year-end 2023 on the back of earnings growth,” S&P said in a press release.

The loan is intended to help support the acquisition of Ventus.

The outlook is stable.

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