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Bond Market News
Seagate Upgraded to BBB- by S&P
August 7, 2026
– Vandit P
Seagate Technology was upgraded by a notch to BBB- from BB+ by S&P, with its outlook revised to positive from stable. The upgrade reflects rapid balance sheet deleveraging and surging hard disk drive demand fueled by AI infrastructure investments. Leverage dropped to 0.5x at the end of Q4 due to earnings expansion and debt paydowns, including $1.2bn planned for the September quarter ($1bn already executed in July). S&P projects $6bn in free cash flow and $18bn in revenue for fiscal 2027. The rating agency expects EBITDA margins to expand to 53–55% driven by higher-margin heat-assisted magnetic recording (HAMR) drives. However, Seagate still remains exposed to inventory cycles and high customer concentration, with three major customers representing 18%, 16% and 10% of its receivables. The positive outlook reflects potential rating upside if net leverage remains below 1.5x.
Its 9.625% 2032s were stable at 110.5, yielding 4.84%.
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