Fitch rates Dell loan BBB-

Fitch Ratings said it affirmed the ratings on Dell Technologies, Inc. and its subsidiaries, including the long-term issuer default rating, at BB+.

Fitch also said it assigned a BBB- rating to Dell Inc.'s $5 billion incremental term loan.

The outlook was revised to negative from stable.

Fitch said its actions affect $55.3 billion of total debt, including Dell's $4 billion and VMware's $1 billion undrawn revolving credit facilities.

The ratings actions follow Dell's enhanced offer for class V shareholders to exchange their lass V shares for class C common shares in Dell or, at the option of the class V shareholders, an aggregate cash consideration up to $14 billion, up $5 billion from the up to $9 billion original cash consideration, the agency said.

The $5 billion enhancement will be debt-funded and should delay Dell's deleveraging until the end of fiscal 2020 at the earliest, Fitch said.

The negative outlook considers risks to weaker-than-expected operating performance and lower-than-anticipated debt reduction, the agency said.

Beyond this transaction, Fitch said it expects Dell will continue prioritizing gross debt reduction with free cash flow over the next two years, even after excluding VMware's free cash flow.

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