Moody’s revises IBM outlook to negative

Moody’s Ratings said it revised its outlook for International Business Machines Corp. to negative from stable and affirmed its A3 ratings and the A3 rating on the backed senior unsecured notes of IBM International Capital Pte. Ltd.

The rating actions follow IBM’s announcement it will buy HashiCorp. for $6.4 billion in cash.

“The negative outlook stems from IBM's decision to allocate capital towards acquisitions beyond its free cash flow generation, necessitating external financing and protracting the time needed to reduce adjusted debt to EBITDA to less than 3x, which Moody's considers appropriate for the A3 rating,” the agency said in a press release.

The deal is subject to approval by HashiCorp shareholders, and customary and regulatory approvals, and is expected to close by the end of 2024.

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