Moody's Cuts CA's Debt Rating

Computer Associates International

CA asserted in a statement that its cash flow is strong, its liquidity is excellent, and it has been steadily repaying its debt, including repayment of over $1 billion in debt thus far this fiscal year, which ends March 31.

"We are disappointed and disagree with Moody's decision, which we believe is not justified by the facts," Islandia-based CA said in the statement.

Moody's lowered CA's senior unsecured long-term rating to Baa2 from Baa1 and confirmed its Prime-2 short-term rating, changing the rating outlook to negative. The action impacts approximately $3.4 billion in debt.

"The downgrade reflects the reduction in cash flow in the current year, the expectation of further erosion unless the company can grow bookings and control costs, and the need to refinance debt maturities in the next 12 to 15 months," Moody's said in a statement.

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The rating cut also reflects the uncertainty surrounding CA President and CEO Sanjay Kumar's confirmation last week that the U.S. Attorney's office and the Securities and Exchange Commission have opened preliminary inquiries into the company, according to the statement.

Moody's announced earlier this month that is was placing CA's debt rating under review.

Shares of CA closed up 62 cents at $16.90 Friday prior to the announcement.