Dell Gets Its Wish: Investment Grade Rating From Major Credit Rating Agencies
One of the main reasons Dell spun out VMware was in order for Dell to achieve an investment grade rating.
As soon as the transaction was complete, three major credit rating agencies— S&P Ratings, Fitch Ratings and Moody’s— all upgraded Dell’s credit rating from ‘High Yield’ to ‘Investment Grade’.
This paves the way for Dell to attract new types of investors due to an improved capital structure for capital allocation.
Dell will use billions it received in cash proceeds from the VMware transaction to pay down its large core debt.
For example, prior to the spin-off, Dell’s large debt “has adversely impacted the credit ratings of VMware,” said VMware in a recent SEC filing. “VMware’s credit rating will no longer be impacted by the debt of Dell Technologies and its remaining subsidiaries following the separation.”