S&P rates Broadcom BBB-

S&P said it affirmed its BBB- corporate credit rating on Broadcom Ltd. and assigned a BBB- corporate credit rating to the new parent company Broadcom Inc.

The outlook was revised to stable from positive.

Broadcom plans to fund its acquisition of CA Inc. with cash on hand and $18 billion of new debt financing and expects to close the transaction in the fourth quarter of 2018.

“Our outlook revision is based on our view that Broadcom's decision to incur a substantial amount of debt to acquire a software company that derives a substantial proportion of revenue from legacy mainframe architecture represents a material strategic shift and a departure from its previously stated M&A philosophy,” S&P said in a news release.

“This acquisition poses great uncertainty in the company's future growth plans and we have limited visibility into the company's long-term financial policy.”

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