Fitch rates Flex notes BBB-

Fitch Ratings said it assigned a BBB- rating to Flex Ltd.'s senior unsecured notes issuance.

The outlook is negative.

Flex has announced the issuance of a benchmark-sized senior unsecured notes issue due 2029, along with a cash tender offer for any and all of its $500 million outstanding principal amount of 4.625% notes due 2020.

The proceeds of the announced issuance will be used to complete the tender offer and Flex intends to use the remaining net proceeds for general corporate purposes, which may include the prepayment of other outstanding debt, the agency said.

In April, Flex also entered into a ¥33.5 billion term loan due April 2024, which will be used to refinance certain other outstanding debt.

The agency said it expects the combined transactions to be leverage neutral.

Flex recently reported its fourth-quarter fiscal 2019 and full year results, Fitch said.

Both revenue and operating EBITDA margin were in line with expectations, the agency said.

Gross leverage remained elevated at 3.4x, above the negative rating sensitivity of 3x, Fitch said.

The company's management said its profitability will remain under pressure as its portfolio rationalization continues during fiscal 2020, the agency said.

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