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Lenovo was upgraded to BBB from BBB- by S&P. It cited the company’s “improved operational resiliency with solid profitability and cash flow” as the primary reasons in a market where PC hardware revenues have fallen. Lenovo’s superior working capital management during the previous quarter has seen free operating cash flows of $320mn, helped by a drop in inventory levels. The rating agency expects debt-to-EBITDA to remain below 1x despite a decline in EBITDA thanks to cost cutting measures and working capital management. S&P also believes that while the macro conditions for the PC market may weigh on Lenovo, its hardware revenue may have bottomed out in the prior quarter.
Lenovo’s dollar bonds were trading steady with its 5.831% 2028s at 99.5, yielding 5.96%.