Research Update: Riverbed Parent Inc. Downgraded To 'CC' On Announced Debt Exchange; Outlook Negative

Riverbed has announced that it is pursuing an amendment and exchange of its existing first-lien term loan and also an exchange (at a discount to par) of its existing senior unsecured notes. We would likely consider this exchange as distressed and tantamount to a default, if consummated based our view that Riverbed's debtholders would receive less value than they were originally promised without adequate compensation, the company's poor operating performance over the past few years, high debt burden, and looming debt maturities. Therefore, we are lowering our issuer credit rating on Riverbed to 'CC' from 'CCC'. We are also lowering our issue-level ratings on the company's senior unsecured notes to 'C' from 'CC' and first-lien term loan to 'CC' from

...- Riverbed has announced that it is pursuing an amendment and exchange of its existing first-lien term loan and also an exchange (at a discount to par) of its existing senior unsecured notes. - We would likely consider this exchange as distressed and tantamount to a default, if consummated based our view that Riverbed's debtholders would receive less value than they were originally promised without adequate compensation, the company's poor operating performance over the past few years, high debt burden, and looming debt maturities. - Therefore, we are lowering our issuer credit rating on Riverbed to '##' from '###'. We are also lowering our issue-level ratings on the company's senior unsecured notes to 'C' from '##' and first-lien term loan to '##' from '###'. - The negative outlook reflects our expectation that we will lower the issuer credit rating to '##' (selective default) when the transaction closes because we consider it a distressed exchange....

Research Update