Moody's slashes EDS debt to junk

Credit rating firm Moody's Investors Service on Thursday cut its rating on Electronic Data Systems debt to a "junk" level. "The downgrade reflects EDS' ongoing business risk, the modest pace of improvement associated with its turnaround program, and low levels of free cash flow to the company's $4.4 billion debt level," Moody's said in a statement. Moody's lowered its rating of EDS senior unsecured notes from "Baa3," its lowest "investment grade" rating, by one notch to "Ba1." The downgrade represented the latest setback for the struggling tech services company.

EDS issued a response saying it disagreed with the downgrade, given the company's "progress and sound financial footing." EDS also said it expects to meet its guidance for the second quarter, and has no current plans to proceed with an equity offering. The company was evaluating raising more than $1 billion of additional capital.