Research Update: CommScope Holding Co. Inc. Rating Lowered To 'CCC' On Risk of Distressed Exchange And Removed From CreditWatch Negative

Network infrastructure provider CommScope Holding Co. Inc.?s third-quarter 2023 results included weaker-than-expected performance for fiscal 2023, an expectation for that to continue through year-end 2024 due to weak customer demand from a large inventory overhang for all its segments, and a tougher macroeconomic environment. We expect the weak performance over the next few years will keep leverage above 10x and limit the company's ability to generate substantial free operating cash flow (FOCF) which in our view increase the risk of distressed exchanges or buybacks within the next 12 months. We therefore lowered our issuer credit rating on CommScope to 'CCC' from 'B-' and removed the ratings from CreditWatch with negative implications, where they were placed on Oct. 31, 2023. We

...- Network infrastructure provider CommScope Holding Co. Inc.'s third-quarter 2023 results included weaker-than-expected performance for fiscal 2023, an expectation for that to continue through year-end 2024 due to weak customer demand from a large inventory overhang for all its segments, and a tougher macroeconomic environment. - We expect the weak performance over the next few years will keep leverage above 10x and limit the company's ability to generate substantial free operating cash flow (FOCF) which in our view increase the risk of distressed exchanges or buybacks within the next 12 months. - We therefore lowered our issuer credit rating on CommScope to '###' from 'B-' and removed the ratings from CreditWatch with negative implications, where they were placed on Oct. 31, 2023. We revised the outlook to negative. - We also lowered our issue-level rating on CommScope's secured debt to '###+' from 'B' (recovery rating: '2') and our issue-level rating on its unsecured debt to '###-' from...

Research Update