S&P gives Unisys notes BB-

S&P said it gave its BB- issue-level rating and 1 recovery rating to Unisys Corp.’s planned $400 million of senior secured notes. The 1 recovery rating indicates an expectation for very high recovery (90%-100%; rounded estimate: 95%) in the event of a default.

Concurrently, the agency revised the recovery rating on Unisys’ senior convertible notes to 4 from 3 due to the increase in its pro forma secured debt claims. The 4 recovery rating indicates an expectation for average (30%-50%; rounded estimate: 45%) recovery in a payment default event. All S&P’s other ratings on Unisys, including the B long-term issuer credit rating and positive outlook, are unchanged.

The company will use the proceeds from these notes to fund a cash contribution to its domestic pension.

The notes will increase the company’s level of reported term debt. “However, given its plan to use the proceeds to fund a pension contribution, we believe the transaction will also reduce Unisys’ pension deficit by broadly the same amount,” S&P said in a press release.

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