01 October 2014 by lberuti
Recently most of the moves in credit have been driven by macro factors (linked with geopolitics, central banks or fund flows) and individual moves were few and far between. There was a lot of beta, and hardly any alpha. In that respect, CSC was the odd one out. The company was reported to have contacted private equity firms regarding the prospect of an LBO. CSC's business is currently split between GBS (which focuses on consulting and software solutions to businesses), GIS (which has data centers, cloud and security offerings), and NPS (which provides a combination of services specific to government customers). It seems that all possible combinations of splits and sales to PE and/or to strategic suitors are being considered, which makes it unclear whether an LBO will effectively take place. But CSC has already been the subject of break-up rumours and the management of the company seems to have been dressing it up for a buyout with divestments (such as the sale of its credit service business to Equifax 2 years ago). So investors did not take any chance, and they sent CSC's risk premium a good 70bps wider since the beginning of the week.