Seagate HDD Cayman: Updated credit analysis after change in ratings outlook to negative - Moody's Global Credit Research

Seagate HDD Cayman: Updated credit analysis after change in ratings outlook to negative

Seagate HDD Cayman: Updated credit analysis after change in ratings outlook to negative - Moody's Global Credit Research
Seagate HDD Cayman: Updated credit analysis after change in ratings outlook to negative
Published May 26, 2023
11 pages (6074 words) — Published May 26, 2023
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About This Report

  
Brief Excerpt:

...Seagate has good operating scale and strong market position as one of the two principal suppliers of high-capacity Hard Disk Drives (HDDs). HDDs are the primary, cost-effective storage solutions for the hyperscale cloud segment that has strong long-term growth prospects, and other applications with large data storage requirements. We expect Seagate's revenue growth to average 2% to 4% over the next 2 to 3 years. However, the sharp and protracted cyclical downturn currently underway will substantially erode Seagate's credit metrics and the company expects an inflection in demand for HDDs will likely be delayed to late 2023 as inventory in the channel remains high. We expect adjusted operating profits to decline about 80% in FY '23, and weak earnings to persist through the first half of FY '24. As a result, total debt to EBITDA (with substantial add-backs) will exceed 7x (Moody's adjusted) at its peak in the first half of FY '24 and we expect negative free cash flow (after dividends) through...

  
Report Type:

Credit Opinion

Company:
Issuer
Seagate HDD Cayman
Format:
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Seagate HDD Cayman: Covenant Quality Post-Sale Snapshot: $500m 8.250% Senior Notes due 2029 / $500m 8.500% Senior Notes due 2031 - Covenant Quality Assessment – 2023/07/20 – US$ 750.00 – ...+ HY-lite covenant package. Lacks both restricted payments and debt incurrence covenants. + Mergers and sales of all or substantially all asset sales. (i) Asset sales below "substantially as an entirety" asset sale are not restricted; (ii) No financial ratio test in merger covenant + Liens subordination. Negative pledge applies only to Principal Property meaning that the Issuer may grant unlimited liens on assets that are not Principal Property without triggering the equal and ratable clause and the key Permitted Liens below can be granted on Principal Property. + CoC. None of the four CoC events (including three of five standard events) triggers the put unless the Notes are downgraded by two rating agencies. + Cross default/cross-acceleration. No cross-default or cross-acceleration provision....

Moody's changes Seagate's ratings outlook to negative; affirms Ba2 CFR - Rating Action – 2023/05/22 – US$ 180.00 – ...MOODY'S CREDIT RATINGS, ASSESSMENTS, OTHER OPINIONS, AND PUBLICATIONS ARE NOT INTENDED FOR USE BY RETAIL INVESTORS AND IT WOULD BE RECKLESS AND INAPPROPRIATE FOR RETAIL INVESTORS TO USE MOODY'S CREDIT RATINGS, ASSESSMENTS, OTHER OPINIONS OR PUBLICATIONS WHEN MAKING AN INVESTMENT DECISION. IF IN DOUBT YOU SHOULD CONTACT YOUR FINANCIAL OR OTHER PROFESSIONAL ADVISER. ALL INFORMATION CONTAINED HEREIN IS PROTECTED BY LAW, INCLUDING BUT NOT LIMITED TO, COPYRIGHT LAW, AND NONE OF SUCH INFORMATION MAY BE COPIED OR OTHERWISE REPRODUCED, REPACKAGED, FURTHER TRANSMITTED, TRANSFERRED, DISSEMINATED, REDISTRIBUTED OR RESOLD, OR STORED FOR SUBSEQUENT USE FOR ANY SUCH PURPOSE, IN WHOLE OR IN PART, IN ANY FORM OR MANNER OR BY ANY MEANS WHATSOEVER, BY ANY PERSON WITHOUT MOODY'S PRIOR WRITTEN CONSENT. MOODY'S CREDIT RATINGS, ASSESSMENTS, OTHER OPINIONS AND PUBLICATIONS ARE NOT INTENDED FOR USE BY ANY PERSON AS A BENCHMARK AS THAT TERM IS DEFINED FOR REGULATORY PURPOSES AND MUST NOT BE USED IN ANY WAY THAT...

Seagate HDD Cayman: Updated credit analysis after ratings downgrade - Credit Opinion – 2022/11/18 – US$ 250.00 – ...Seagate has good operating scale and strong market position as one of the two suppliers of high-capacity Hard Disk Drives (HDDs). HDDs are the primary, cost-effective storage solutions for the fast-growing hyperscale cloud segment and applications with large data storage requirements. We expect Seagate's revenue growth to average 2% to 4% over the next 2 to 3 years. However, the sharp cyclical downturn underway will substantially erode Seagate's credit metrics. We expect adjusted operating income to fall 60% to 70% in FY '23 and total debt to EBITDA to approach or exceed 5x (Moody's adjusted) by the end of FY '23. Seagate has high business risks from its revenue concentration in the HDD product category, ongoing substitution risks from flash memory in legacy end markets that still account for a meaningful share of its revenues, and sustained pricing pressure that it needs to offset through technology innovation and growth in capacity shipments. Product cycles are short and execution risk...

Moody's downgrades Seagate's CFR to Ba2; outlook stable - Rating Action – 2022/11/08 – US$ 180.00 – ...MOODY'S CREDIT RATINGS, ASSESSMENTS, OTHER OPINIONS, AND PUBLICATIONS ARE NOT INTENDED FOR USE BY RETAIL INVESTORS AND IT WOULD BE RECKLESS AND INAPPROPRIATE FOR RETAIL INVESTORS TO USE MOODY'S CREDIT RATINGS, ASSESSMENTS, OTHER OPINIONS OR PUBLICATIONS WHEN MAKING AN INVESTMENT DECISION. IF IN DOUBT YOU SHOULD CONTACT YOUR FINANCIAL OR OTHER PROFESSIONAL ADVISER. ALL INFORMATION CONTAINED HEREIN IS PROTECTED BY LAW, INCLUDING BUT NOT LIMITED TO, COPYRIGHT LAW, AND NONE OF SUCH INFORMATION MAY BE COPIED OR OTHERWISE REPRODUCED, REPACKAGED, FURTHER TRANSMITTED, TRANSFERRED, DISSEMINATED, REDISTRIBUTED OR RESOLD, OR STORED FOR SUBSEQUENT USE FOR ANY SUCH PURPOSE, IN WHOLE OR IN PART, IN ANY FORM OR MANNER OR BY ANY MEANS WHATSOEVER, BY ANY PERSON WITHOUT MOODY'S PRIOR WRITTEN CONSENT. MOODY'S CREDIT RATINGS, ASSESSMENTS, OTHER OPINIONS AND PUBLICATIONS ARE NOT INTENDED FOR USE BY ANY PERSON AS A BENCHMARK AS THAT TERM IS DEFINED FOR REGULATORY PURPOSES AND MUST NOT BE USED IN ANY WAY THAT...

Seagate HDD Cayman - December 2021 (LTM): Peer Snapshot - Peer Snapshot – 2022/02/28 – US$ 750.00 – ...Ba1 Stable Baa3 Stable Baa3 Stable Seagate HDD Cayman Western Digital Corporation Micron Technology, Inc....

Seagate HDD Cayman - October 2021 (LTM): Peer Snapshot - Peer Snapshot – 2021/11/23 – US$ 750.00 – ...Seagate HDD Cayman Western Digital Corporation Micron Technology, Inc. Ba1 Stable Baa3 Negative Baa3 Stable...

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Moody's Global Credit Research—Moody's Investors Service, a leading global credit rating, research and risk analysis firm, publishes credit opinions, research, and ratings on fixed-income securities, issuers of securities and other credit obligations. Credit ratings and research help investors analyze the credit risks associated with fixed-income securities. Ratings also create efficiencies in fixed-income markets and similar obligations, such as insurance and derivatives, by providing reliable, credible, and independent assessments of credit risk. For issuers, Moody's services increase market liquidity and may reduce transaction costs.

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Cite this Report

  
MLA:
Moody's Global Credit Research. "Seagate HDD Cayman: Updated credit analysis after change in ratings outlook to negative" May 26, 2023. Alacra Store. Jun 15, 2024. <http://www.alacrastore.com/moodys-credit-research/Seagate-HDD-Cayman-Updated-credit-analysis-after-change-in-ratings-outlook-to-negative-PBC_1369608>
  
APA:
Moody's Global Credit Research. (). Seagate HDD Cayman: Updated credit analysis after change in ratings outlook to negative May 26, 2023. New York, NY: Alacra Store. Retrieved Jun 15, 2024 from <http://www.alacrastore.com/moodys-credit-research/Seagate-HDD-Cayman-Updated-credit-analysis-after-change-in-ratings-outlook-to-negative-PBC_1369608>
  
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