Fitch rates Computer Sciences loan BBB

Fitch Ratings said it assigned a BBB rating to Computer Sciences Corp.’s $525 million unsecured term loan.

The outlook is stable.

The company also has a long-term issuer default rating of BBB, short-term issuer default rating of F2, senior unsecured debt rating of BBB and revolving credit facility rating of BBB.

The proceeds from the new term loan will be used to partially repay amounts drawn under the company’s revolving credit facilities, redeem the company’s 6.5% notes due 2018 and for general corporate purposes.

The term loan is pari passu with existing unsecured debt, the agency said.

Under the term loan, the company is required to maintain a debt-to-EBITDA ratio of no more than 3x, Fitch said.

The ratings reflect a belief that the pending acquisitions of Xchanging and UXC for $1 billion are consistent with the company’s strategy of expanding next-generation offerings to offset declining legacy business, the agency said.

The ratings also consider expectations for higher near-term leverage as the company uses cash previously earmarked for debt reduction to fund the acquisitions, Fitch said.

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