S&P: Cadence Design Systems Inc. Liquidity Assessment Revised To Strong; All Ratings Affirmed; Outlook Stable
We also affirmed our 'BBB-' issue-level ratings on the firm's $250 million revolving unsecured credit facility, $300 million senior unsecured term loan, and $350 million of senior unsecured notes.
"Our rating on Cadence is based on our view that the company's leading position in semiconductor design software markets, increasing revenue share from customers outside the semiconductor industry that use Cadence's products to more closely align their software and hardware development with the design of the underlying silicon, and significant cash balances will enable the firm to generate significant free cash flow through industry cycles," said S&P Global Ratings credit analyst James Thomas.
A strong track record of high-single-digit revenue growth and limited capital spending give us confidence that Cadence will be able to sustain its current strong liquidity profile even as shareholder returns have increased over the past year.
The stable outlook on Cadence reflects our expectation that the company's solid position within semiconductor design software markets and its high degree of contractual revenues will enable it to retain its market position through semiconductor business cycles.