S&P Treats H-P Like A Bank… Credit Downgrade (HPQ)

Is Hewlett-Packard Co. (NYSE: HPQ) at risk like some of the banks?  Probably not, even if it is in a turnaround, even if it has a recent history that is not good, and even if it has a new CEO after a management capitulation.  After the close on Wednesday came word that Standard Poor’s is treating H-P sort of like a bank or a PIIGS nation in Europe… S&P downgraded its credit rating.

The good news is that H-P is still considered “investment grade” and that status does not really look to be at risk.  The rating downgrade takes HP to “BBB+” and the outlook is STABLE.

Some of the issues considered are that H-P recently “clarified that it is maintaining its fundamental business mix, including the retention of its Personal Systems Group.”  S&P also noted the expectation for lower sales and profits in 2012.

This rating change will clear a review after the rating outlook was given a “Negative” status on August 18, 2011, but this also means that H-P is losing what was an “A” rating.  The short-term rating was also trimmed to ‘A-2’ from ‘A-1’.

As far as why the rating outlook is stable, this is based upon expected strong operating trends and on the expectation that its financial policies “will sustain debt protection metrics near current levels.”

Apparently the market does not care much about the rating.  Shares closed up 3.9% at $27.95 today and the stock is still indicated around $27.95 after the closing bell.  Shares hit $28.00 today and the 52-week trading range is $21.50 to $49.39.

JON C. OGG