Moody's cuts Brocade to SGL-3

Moody's Investors Service said it affirmed Brocade Communications Systems, Inc.'s Ba3 corporate family and probability-of-default rating and Ba2 ratings (LGD3, 42% from 31%) for $125 million senior secured revolving credit facility due 2013 and $1.1 billion senior secured term loan due 2013.

Brocade's liquidity rating was revised to SGL-2 from SGL-1.

The outlook is stable.

The change in liquidity rating reflects that Brocade's liquidity position remains good for the next four quarters, but is not as strong as when the SGL-1 was initially assigned in September 2008, according to the agency.

The revision is driven largely by the consideration that the maturity of $173 million in convertible debt comes due within the next 12 months and the impact of the economic downturn on EBITDA and cash flow, the agency said.

Moody's affirmation reflects the continued strength of the company's leadership position in storage area networking, its niche position in the broader data networking market and expectations for positive cash generation from both businesses.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.