S&P gives Everett SpinCo, loans, notes BBB

S&P said it assigned its BBB corporate credit rating to Everett SpinCo Inc., to be renamed DXC Technology Co. at the close of the merger of Computer Sciences Corp. and the IT outsourcing services unit of Hewlett-Packard Enterprise Co.

The outlook is negative.

The agency affirmed the BBB corporate credit rating, BBB issue-level ratings and A-2 short-term commercial paper rating on Computer Sciences and removed the ratings from CreditWatch with negative implications.

S&P also assigned a BBB issue-level ratings to a series of unsecured term loans due 2020 and 2022 and to a series of senior notes due 2020, 2024 and 2027 issued by Everett SpinCo.

The actions reflect the agency’s expectation for the acquisition to close, leading to pro forma leverage of about 2 times on March 31. The original Computer Sciences CreditWatch placement on May 25, 2016 followed its announcement of its agreement to merge with Hewlett Packard Enterprise Co.

"The negative outlook reflects our view of substantial execution risk as DXC migrates its business to the growing professional technology services markets, integrates HPES, a legacy IT outsourcing company with more than twice the revenues of CSC, and seeks to revive revenue growth," S&P credit analyst Jennie Chang said in a news release.

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