IBM Corp, as we warned it would (CI No 1,819), has had its credit ratings put under review for possible downgrading by Moody’s Investors Service Inc. The move covers $18,000m of debt of IBM, IBM Credit Corp and IBM International Finance NV. Moody’s review will focus on IBM’s ability to stabilise its business position and improve market share, and whether further restructuring will be needed to increase profitability. It says measures already announced, plus shipments of the Summit mainframes, should result in improved margins in the near term. IBM’s senior debt is presently rated a rock-solid Triple-A, which gives IBM Credit Corp an advantage over competitors in setting keen lease rates; its convertible subordinated debt is rated double A-1; the Prime-1 rating on its commercial paper is not affected by the review. Separately, Standard & Poor’s Corp. said it affirmed its Triple-A ratings on IBM’s senior and subordinated debt but said the rating outlook remains negative, a state maintained since, as reported, it was revised from stable back on August 16. Failure by IBM to record progress in restoring profitability to Triple-A levels would result in a lower rating, Standard & Poor’s said.
