Overview
S&P Global Ratings downgraded Xerox Holdings Corp.'s issuer rating to 'SD' (selective default) from 'CCC+' after the company repurchased roughly $101 million in face value of its senior unsecured notes maturing in 2028 at a discount during the first quarter of 2026. At the same time, S&P lowered its issue-level rating on those 2028 notes to 'D' from 'CCC'.
Details of the repurchase
Xerox repurchased about 13% of the principal amount of the 2028 notes in Q1 2026, realizing an approximate discount of $56 million relative to the original face value. S&P treated the below-par repurchases as equivalent to a selective default because holders received less than the full amount originally promised. S&P noted that aside from the affected 2028 issue-level rating, all other issue-level ratings for the company remain unchanged.
Ratings outlook and context
S&P indicated it will reassess Xerox's issuer credit rating within several days and expects the rating to be at 'CCC+' or lower. The agency framed the transaction against a backdrop of potential refinancing risks, pointing to the company's constrained growth prospects within a secularly declining print industry and expectations of core free operating cash flow deficits.
Outstanding maturities and liquidity
As of March 31, 2026, Xerox had $649 million of notes due in 2028 and $500 million due in 2029 still outstanding. The company has signaled that it is willing to actively manage its debt load ahead of those maturities, including the possibility of additional below-par repurchases or the exercise of its issued common stock warrants.
Xerox also holds $125 million in senior bridge notes due in June 2026. S&P stated it believes Xerox will have sufficient liquidity to cover that bridge financing without resorting to refinancing.
Cash-flow and revenue expectations
S&P expects Xerox to report continued negative core free operating cash flow in 2026. The ratings firm projects pro forma revenue declines in the 4% to 6% range, citing the challenging conditions in the print market as a driver of that contraction.
Implications for the 2028 notes
S&P said it will likely retain the 'D' issue-level rating on the 2028 notes until it no longer expects further below-par repurchases or other transactions that it would characterize as a debt restructuring to affect that instrument in the near term.
Conclusion
The selective-default designation reflects S&P's view that the discounted repurchase amounted to a failure to meet originally promised terms to noteholders. The agency's near-term reassessment of the issuer rating, combined with anticipated negative free operating cash flow and projected revenue declines, underscores the rating agency's concern about Xerox's refinancing profile and the pressures facing firms operating in the secularly declining print industry.
Note: This article presents the actions and views reported by S&P and the statements attributed to Xerox. It does not introduce additional facts beyond those reported in the ratings announcement and the company's stated intentions.