Fitch downgrades Xerox

Fitch Ratings said it downgraded Xerox Corp.'s long-term ratings and senior unsecured ratings by one notch to BB and BB with recovery rating of RR4.

The agency also placed these ratings on Rating Watch negative.

The downgrades reflect the deterioration in Xerox's operating performance relative to expectations at the time of Xerox's downgrade in 2018 and the apparent shift from already aggressive financial policies to corporate actions that could potentially harm existing bondholders, Fitch said.

These include Xerox's proposed corporate reorganization into a holding company structure and a potential strategic transaction involving Xerox's customer financing business and related assets, the agency said.

Should the reorganization proceed, Xerox's revolving credit facility would benefit from a guarantee from the holding company, placing them higher in priority than Xerox's existing debt, Fitch said.

Xerox's revenue trajectory continues to worsen and has been weaker than expectation at the time of its downgrade to BB+ in August 2018, the agency said.

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