Moody’s cuts Conduent

Moody’s Investors Service said it downgraded Conduent Business Services, LLC’s corporate family rating to B1 from Ba3 and its probability of default rating to B1-PD from Ba3-PD. Moody’s also downgraded its rating on Conduent Business’ (as well as Affiliated Computer Services International BV’s ) senior secured credit facilities to B1 from Ba3 and the rating on the issuer’s unsecured notes to B3 from B2.

The agency revised the outlook to negative from stable. The speculative grade liquidity rating remains SGL-2.

The downgrade reflects sustained weakness in the company’s operating performance, including ongoing sales declines and modest free cash flow generation, which Moody’s expects to persist over the coming year, as well as a significant erosion in the company’s equity cushion. Additionally, uncertainties concerning the effect of the coronavirus outbreak cast further pressure on Conduent’s credit quality. Conduent Business is a wholly owned subsidiary of Conduent Inc.

The negative outlook reflects Moody’s forecast Conduent’s sales will decline by 8% in 2020 due to ongoing pricing pressure and softness in new business signings.

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