Moody's rates Dell loans & notes Ba2, notes Ba3

Moody's Investors Service said it assigned Ba3 corporate family and Ba3-PD probability of default ratings to Dell Inc., the parent company of Dell International LLC.

In addition, Moody's assigned Ba2 ratings to Dell International LLC's senior secured term loans and first-lien notes, and a Ba3 rating to the second-lien notes.

The Prime-2 short-term commercial paper rating was withdrawn. Upon closing of the debt financing, the existing unsecured notes held at Dell Inc. will be downgraded to B1 from Baa1. For the unsecured notes that are paid off in connection with the financing, the ratings will be withdrawn.

The outlook is stable.

These actions will conclude the review for downgrade initiated on Feb. 5, 2013 following the announcement of a definitive agreement with founder Michael Dell (75% owner) and Silver Lake (25% owner) to acquire Dell in a leveraged buyout with the equity valued at over $24 billion.

Moody's said the Ba3 corporate family rating reflects the high initial debt (gross reported debt of over $18 billion; 6 times debt to EBITDA) arising from the LBO debt combined with the challenges of the declining personal computer (PC) industry, which still accounts for nearly half of Dell's revenues.

The agency said it expects Dell's PC revenues to continue eroding in 2014 in the low single digits as the decrease in mobility products is partly offset by slight growth of commercial desktops.

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