Flextronics (FLEX) Raised to 'BBB-' by S&P; Sees Favorable Mix to Faster-Growing, More-Profitable End Markets

Standard & Poor's Ratings Services today said it raised its corporate credit rating on Flextronics (NASDAQ: FLEX) to 'BBB-' from 'BB+' and revised the outlook on the company to stable from positive.

At the same time, we raised our issue-level rating on the company's senior unsecured debt to 'BBB-' from 'BB+'. We also withdrew our recovery ratings on all outstanding senior unsecured debt.

"The upgrade reflects Flextronics' improving mix of faster-growing, more profitable end-markets, and our expectation that the company intends to maintain a financial profile consistent with its investment-grade rating," said Standard & Poor's credit analyst Christian Frank.

"The ratings reflect the company's solid market position and leverage in the high-1x area as of March 31, 2015, as well as the volatility of the EMS sector," he added.

The stable outlook reflects our expectation that Flextronics' leading market position and improving mix of end-markets will allow it to deliver consistent operating performance, and that it will maintain a financial profile in line with its investment-grade rating.

We could lower the rating if Flextronics loses a key customer, or if it pursues more aggressive mergers and acquisitions or shareholder return objectives, such that leverage increases to above 3x on a sustained basis.

In our view, an upgrade is unlikely during the next 24 months due to the company's customer concentration and its competitive and volatile industry conditions.

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