Hewlett-Packard (HPQ) Ratings Remain on CreditWatch Negative by S&P Following Form 10 Filing

Standard & Poor's Ratings Services said it kept its ratings, including the 'BBB+' corporate credit rating, 'A-2' commercial paper rating, and 'BBB+' senior unsecured debt rating, on Hewlett-Packard (NYSE: HPQ) (HP) on CreditWatch, where we placed them with negative implications on Oct. 6, 2014.

"The original CreditWatch placement on Oct. 6, 2014 followed the company's announcement that it plans to separate into two public companies in 2015 through a tax-free transaction," said Standard & Poor's credit analyst John Moore.

HP plans to separate its enterprise technology infrastructure, software, and services businesses, Hewlett-Packard Enterprise Co. (HPE), from its remaining personal systems and printing businesses, which it plans to rename HP Inc. (HPI) upon separation. While the separation will provide greater operational focus at each new company, it will also diminish HP's business diversity. HP expects to complete the separation by Nov. 1, 2015.

On Aug. 10, 2015, HP filed an update to its initial Form 10 in which it detailed its plans to allocate $10 billion in cash and $16 billion in debt to HPE. Based on our assessment of HPI (the surviving entity) upon separation, we will likely lower our existing corporate credit rating rating on HP to 'BBB' from 'BBB+' with a stable outlook, affirm our 'A-2' short-term issue rating, and subsequently withdraw our ratings on HP. We will also likely assign to HPE our 'BBB' corporate credit rating with a stable outlook, and our 'A-2' short-term rating for commercial paper as the separation approaches.

We will monitor developments related to the proposed transaction, including HP's receipt of its board of directors' final approval and the effectiveness of the Form 10, before resolving the CreditWatch listing.

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