Research Update: CommScope Holding Co. Inc. Downgraded To 'B-' On Continued High Leverage, Outlook Stable; Debt Ratings Lowered

CommScope continues to report year-over-year revenue declines because of COVID-19-related macroeconomic weakness and slower-than-expected carrier capital spending. Although we expect revenue and EBITDA to stabilize at current levels and recover modestly in 2021, leverage of 8.7x as of the quarter ending in June remains well above our original forecast for 2020. We forecast sustained weak credit metrics well into 2021. We view recent management changes, including the appointment of a new CEO, as neutral to the rating at this point, and continue to expect the company to reduce leverage to the extent possible. As a result, we are downgrading CommScope Holding Co. Inc. to 'B-' from 'B'. The outlook is stable. We are also lowering the issue-level rating on the

...- CommScope continues to report year-over-year revenue declines because of COVID-19-related macroeconomic weakness and slower-than-expected carrier capital spending. - Although we expect revenue and EBITDA to stabilize at current levels and recover modestly in 2021, leverage of 8.7x as of the quarter ending in June remains well above our original forecast for 2020. We forecast sustained weak credit metrics well into 2021. - We view recent management changes, including the appointment of a new CEO, as neutral to the rating at this point, and continue to expect the company to reduce leverage to the extent possible. - As a result, we are downgrading CommScope Holding Co. Inc. to 'B-' from 'B'. The outlook is stable. - We are also lowering the issue-level rating on the firm's secured debt to 'B' from 'B+' and on its unsecured debt to '###+' from 'B-'. The recovery ratings on the debt remain '2' and '5', respectively. - The stable outlook is based on our view that credit metrics, while elevated,...

Research Update