Bond.az - Fitch Ratings upgraded Viavi Solutions Inc. to BB from BB- and assigned a stable outlook after the company repaid $450 million in term loan debt funded by an equity issuance.
The upgrade reflects a reduction in EBITDA leverage for fiscal 2026 to 2.6x from 5.1x after Viavi used net proceeds of $557.2 million from the equity issuance to repay the outstanding balance on its first-lien secured term loan. Fitch also upgraded the company's senior unsecured notes to BB with a Recovery Rating of RR4 from BB-/RR4.
Viavi operates in wireless and wireline test-and-measurement markets, with 70% to 80% of revenue from its Network and Service Enablement segment and the remainder from Optical Security and Performance Products. The company completed acquisitions of Inertial Labs, Inc. and high-speed ethernet testing assets from Spirent Communications plc in 2025.
Fitch expects organic revenue growth in the mid-single digits after fiscal 2026, supported by demand for higher bandwidth through fiber buildout by data center operators and service providers. The ratings agency forecasts EBITDA margins in the high teens, supported by a 2026 restructuring plan targeting $30 million in annual operating cost reductions.
Viavi's EBITDA leverage now sits below the 3.0x upgrade sensitivity for its BB rating. Fitch said sustained leverage below 3.0x, along with high-single-digit organic revenue growth and reduced EBITDA margin volatility, could lead to a future upgrade.
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