Moody’s rates VMware notes Baa2

Moody's Investors Service said it assigned a Baa2 senior unsecured rating to VMware, Inc.'s proposed notes offering.

The outlook is stable.

“The Baa2 rating reflects VMware's very strong market position in its core compute virtualization and data center management product lines, consistently strong cash balances (greater than $10 billion following the debt issuance) and substantial free cash flow approaching $2.5 billion over the next year,” the agency said in a news release.

Moody’s said that while it considers VMware's credit metrics and business profile to be comparable to that of Adobe Systems Inc. (A3), VMware's ratings are limited by the concentrated ownership structure.

Pro forma for the debt issuance, the agency expects VMware's adjusted debt to EBITDA will be about 2x times with a net cash position of more than $6 billion.

The agency said the Baa2 unsecured rating is one notch higher than the Baa3 secured debt rating of Dell Inc. and reflects Moody's expectation of a lower probability of default at VMware. VMware is an unrestricted subsidiary of Dell, which does not guarantee any of Dell's debt, the agency added.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.