S&P removes London Stock Exchange Group ratings from CreditWatch
S&P Global Ratings has taken rating actions regarding London Stock Exchange Group (LSEG).
S&P said it is removing its ‘A’ long-term and ‘A-1’ short-term issuer credit ratings on LSEG from CreditWatch, where it placed them with negative implications on August 1, 2019, and affirming them.
With sustainably lower leverage after the sale of Borsa Italiana, LSEG’s prudent financial policy is the principal reason for S&P’s affirmation. The rating agency believes the group’s leverage will be sustainable over the first 24 months of its operations, due in large part to the sale of the BI group. This divestment is a condition of the European Commission’s approval of the Refinitiv deal, and S&P considers the contracted sale to Euronext as highly likely to proceed.
The rating agency assumes LSEG will use substantially all proceeds from the divestment, currently €4.325 billion, to pay down debt incurred at deal close. This would leave LSEG’s leverage at 2.7x–2.9x at the end of 2021, falling toward 1.9x-2.1x by end-2022.
This reduced leverage brings LSEG’s financial risk in line with its historical levels, which is central to S&P affirmation of the ratings.
Let’s note that S&P also assigned negative outlook on LSEG. This acknowledges the ambitious synergy program and mixed growth prospects in the acquired businesses, as well as risks to the successful integration of Refinitiv and LSEG’s plans to reduce leverage.
On January 29, 2021, LSEG confirmed the completion of its all-share acquisition of Refinitiv. LSEG Shares were issued to the Refinitiv Sellers in satisfaction of the consideration due under the terms of the transaction. Refinitiv shareholders have acquired an approximate 37% economic interest and 29% voting interest in LSEG.