Xerox Downgraded to Selective Default After $101 Million Below‑Par Repurchase
S&P Global Ratings announced on 12 June 2026 that it has downgraded Xerox Holdings Corp. (NYSE:XRX) to a selective default (SD) rating from CCC+. The downgrade follows Xerox’s repurchase during the first quarter of 2026 of approximately $101 million face value of its senior unsecured notes due in 2028 at a discount, capturing a discount of roughly $56 million. The repurchase represented about 13 % of the principal amount of the 2028 notes, and S&P treated the below‑par transaction as a selective default because noteholders received less than the original contractual promise.
In conjunction with the issuer‑level downgrade, S&P lowered the issue‑level rating on the 2028 notes to D from CCC, while all other issue‑level ratings for Xerox remained unchanged. The rating agency indicated it will reassess Xerox’s overall credit rating within several days and expects the issuer rating could be raised to CCC+ or a lower grade, reflecting the view that the transaction is part of broader refinancing risk amid a secularly declining print industry and anticipated core free operating cash‑flow deficits.
Xerox’s debt profile as of 31 March 2026 includes $649 million of senior unsecured notes due in 2028, $500 million of notes due in 2029, and $125 million of senior bridge notes due in June 2026. S&P believes Xerox has sufficient liquidity to meet the obligations of the bridge notes without the need for additional refinancing. The company has expressed willingness to manage its outstanding debt balance ahead of upcoming maturities through further below‑par repurchases or by exercising its issued common‑stock warrants.
Looking ahead, S&P expects Xerox to continue reporting negative core free operating cash flow throughout 2026 and projects pro‑forma revenue declines of 4 % to 6 % given the challenged and contracting print market. The agency indicated it will likely maintain the D rating on the 2028 notes until it no longer anticipates further below‑par repurchases or other transactions that could be viewed as a debt restructuring affecting that instrument in the near term.