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HP downgraded in merger fear

Size of Compaq deal hits credit rating...

By Kate Hanaghan

Published: 8 March 2002 08:30 GMT

HP's credit rating was yesterday downgraded by Standard and Poor after the agency cited increased levels of strategic risk in the PC maker's contentious merger proposal.

While recognising the strategic validity of HP's bid to consume Compaq for $22bn, Standard and Poor also highlighted the "significant execution risks inherent in a merger of this size".

Both HP's short and long-term ratings have been cut. Unsecured debt has been reduced from AA- to A-. The ratings agency has also warned of the possibility of further cuts.

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