Viavi Solutions Rating Upgrade and Financial Outlook
S&P Global Ratings raised Viavi Solutions Inc.’s long‑term credit rating to BB from B+ on 16 June 2026, citing the company’s full repayment of the outstanding borrowings under its term‑loan B. The repayment was funded entirely with net proceeds from a $575 million common stock issuance completed in May 2026. Concurrently, S&P upgraded the issue‑level rating on Viavi’s senior unsecured debt to BB and assigned a recovery rating of 3, reflecting the substantially reduced priority of the remaining debt.
The rating agency now expects Viavi’s adjusted debt‑to‑EBITDA ratio to improve to 2.8× at the close of the fiscal year ending 27 June 2026, a sharp revision from the prior expectation of 5.5×. Further leverage reduction is projected, with the ratio anticipated to reach 2.2× in fiscal 2027. This improvement follows Viavi’s repayment of all debt that had been raised to finance the acquisition of Spirent Communications PLC assets less than a year after that issuance.
S&P maintains a stable outlook, forecasting that leverage will continue to decline to the low‑2× range over the next twelve months as Viavi benefits from accelerating demand from hyperscalers, the full‑year integration of Spirent assets, and the roll‑off of restructuring expenses. Reported free operating cash flow is projected at $60‑70 million for fiscal 2026 and $160‑170 million for fiscal 2027, underpinned by a stronger earnings profile, modest working‑capital outflows, and controlled capital expenditures.
The integration of Spirent’s assets is expected to contribute an annual run‑rate revenue of approximately $200 million, enhancing Viavi’s earnings potential. Gross margins are anticipated to rise modestly, with Spirent’s higher‑margin assets lifting the overall gross margin toward 70%, compared with Viavi’s reported 57.3% gross margin in fiscal 2025. Additionally, the scheduled roll‑off of $32 million in restructuring costs in fiscal 2026 will further support margin expansion.
Organic top‑line growth is projected at ~19% in fiscal 2026 and ~14% in fiscal 2027, driven primarily by robust demand from the data‑center ecosystem. Customers in this ecosystem—including hyperscalers, optical‑module and system manufacturers, and silicon vendors—now represent almost 50% of sales in Viavi’s Network and Service Enablement segment, up from roughly 30% at the end of June 2025.