Fitch assigns BBB+ to DXC notes

Fitch Ratings said it assigned a BBB+ rating to DXC Technology Co.'s British pound-denominated senior note offering.

The unsecured notes will rank equally with all of DXC's existing and future senior unsecured and senior debt.

The company intends to use the net proceeds to repay British pound-denominated debt under its revolver or its British pound-denominated term loan. It could also use the funds to pay down other higher-spread dollar-denominated debt as it balances its aggregate British pound liability with its U.K-based operations, which are its largest non-U.S. business.

“Fitch continues to expect DXC will bring its leverage to 2.0x or below as it executes on its merger-related cost synergies and increases its digital offerings,” Fitch said in a news release.

“Digital revenue has increased low double digits in each of the last three quarters.

“Additionally, DXC indicated it is on track to deliver $1.1 billion of year one cost savings, ahead of plan, and $1.6 billion run rate cost savings exiting FY18. Fitch believes DXC will be able to maintain its leverage profile consistent with its BBB+ issuer default rating when it completes the planned spin-off of its U.S. public sector (USPS) business.”

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