Cohu Inc. Downgraded To 'B' On Weak Performance, Higher Leverage; Outlook Stable

U.S.-based semiconductor test and inspection equipment provider Cohu Inc.'s operating performance deteriorated through the second quarter of 2019, steeply increasing S&P Global Ratings-adjusted leverage to approximately 7.9x. We expect this underperformance to continue through the second half of fiscal 2019 as semiconductor capital spending remains weak. We are lowering our issuer credit rating on Cohu to 'B' from 'BB-' and our issue-level rating on its first-lien credit facility to 'B' from 'BB-', reflecting the recent leverage increases. Our '3' recovery rating is unchanged. The stable outlook is based on our view that while leverage will remain around 7x though the end of fiscal year 2019, Cohu will continue to execute on its projected cost synergies as a result of the

...October 16, 2019 - U.S.-based semiconductor test and inspection equipment provider Cohu Inc.'s operating performance deteriorated through the second quarter of 2019, steeply increasing S&P Global Ratings-adjusted leverage to approximately 7.9x. - We expect this underperformance to continue through the second half of fiscal 2019 as semiconductor capital spending remains weak. - We are lowering our issuer credit rating on Cohu to 'B' from '##-' and our issue-level rating on its first-lien credit facility to 'B' from '##-', reflecting the recent leverage increases. Our '3' recovery rating is unchanged. - The stable outlook is based on our view that while leverage will remain around 7x though the end of fiscal year 2019, Cohu will continue to execute on its projected cost synergies as a result of the Xcerra acquisition, supporting a leverage reduction to approximately 5x in fiscal year 2020. NEW YORK (S&P Global Ratings) Oct. 16, 2019--S&P Global Ratings today took the rating actions listed...

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