OREANDA-NEWS. S&P Global Ratings said today that it lowered its corporate credit rating on EMC Corp. to 'BB+' from 'A' (the same as our rating on Dell Technologies Inc.). At the same time, we removed the corporate credit rating from CreditWatch, where we had placed it with negative implications on Oct. 12, 2015, following Dell Technologies' announcement that it would acquire EMC. The rating outlook is stable.

We also lowered our issue-level rating on EMC's outstanding senior unsecured notes, totaling $5.5 billion, to 'BB-' from 'A' and assigned the notes a recovery rating of '6', reflecting our expectation of negligible (0%–10%) recovery in the event of a payment default. The senior unsecured notes will remain outstanding and become a part of Dell Technologies' overall debt capital structure. The $5.5 billion outstanding senior unsecured notes do not have guarantees from Dell Technologies, Dell, Dell International LLC, or EMC's direct or indirect wholly owned subsidiaries, unlike the unsecured notes totaling $3.25 billion issued by coborrowers Dell and EMC. (See our recovery report on Dell, published Aug. 12, 2016, on RatingsDirect.)

We subsequently withdrew our 'BB+' corporate credit rating on EMC and our 'A-1' short-term rating on the company's commercial paper program, following the repayment of amounts outstanding, at the issuer's request.

"The rating actions follow the closing of Dell Technologies' acquisition of EMC," said S&P Global Ratings' credit analyst David Tsui. With the transaction close, EMC becomes a wholly owned subsidiary of Dell, and we believe it becomes core to Dell according to our group rating methodology assessment. Thus, we equalize our corporate credit rating on EMC with those on its parent, Dell, at 'BB+'.

In our view, EMC is highly unlikely to be sold by Dell Technologies, because the company is successful at its business, it has a long-term commitment from Dell's management, and it operates in a business segment that is integral to Dell Technologies' overall strategy.