Moody's Places H-P Senior Rating On Review For Downgrade

Moody's Investors Service on Monday placed Hewlett-Packard's senior unsecured rating on review for a downgrade, after the company said it's planning to separate its personal computer and printer businesses from its enterprise businesses via a tax-free spinoff to shareholders. Moody's said its review will focus on the structure of the spinoff, the capital structure and financial policies of the remaining business and its ability to grow in a highly competitive environment. "Although the separation of the two businesses may simplify the company's structure and provide greater focus to the management teams, post-spin the remaining business will be smaller and less diverse and consequently will have a weaker business profile," said Moody's analyst Richard Lane. H-P had $21 billion of debt as of July 2014, down from $29 billion a year ago. Moody's rates the company at Baa1, or three notches above junk status.