DXC Change of Control Language

Rating: Baa2[N]/BBB-[S]/BBB[S]

• On DXC CoC language; “Change of Control Triggering Event” means the occurrence of both a Change of Control and a Rating Event.
• The Change of Control language appears normal and likely to be triggered; sale of all or substantially all assets, transfer of >50% of voting rights, conversion/exchange of equity or the dissolution/liquidation of the parent.
• A rating event is defined as a HY rating by two of the three agencies and seems likely to be triggered given the levering likely to follow; already on BBB- at S&P and Baa2[N] at Moody’s as of yesterday.
• There is additional language around a transaction not being deemed a change of control if DXC becomes a wholly owned subsidiary with more than 50% of voting rights in a new holding company (not relevant here) or if the company remains public (again not logical given the nature of the deal).
• DXC bonds further from par are outperforming today though still relatively muted which we attribute to this just being a sources report for now. EUR 31s 2.6pts higher at EUR 78 and their 27s +0.5pts at EUR 89. 26s are flat at EUR 96.