S&P Global Ratings today said it assigned its ‘AA’ ratings to Deutsche Boerse AG’s issuance of senior unsecured notes. The Exchange is raising two notes amounting to €1 billion, subject to market and customary conditions.

S&P explains that the company is poised to use the proceeds to finance the €1.6 billion acquisition of 80% of the Institutional Shareholder Services (ISS) group.

As FX News Group has reported, the transaction values ISS at USD 2,275 million for 100% of the business (cash and debt free). Genstar Capital and current management will continue to hold a stake of approximately 20%.

The transaction is expected to close in the first half of 2021 subject to customary closing conditions and regulatory approvals.

The issuance will lead to the anticipated increase in Deutsche Boerse’s leverage, but S&P expects the company will maintain a minimal financial risk profile. S&P estimates debt to EBITDA at 1.6x and funds from operations (FFO) to debt of 45%-49% at year-end 2021, before improving to 1.4x and 50%-55%, respectively, in 2022.

Let’s recall that Deutsche Börse posted solid results for 2020 with reported EBITDA up 12% and net profit up 9% year-on-year. The improvement was supported by high trading volume of equities and equity index derivatives, and consolidation of recent acquisitions, while interest income at Clearstream fell substantially because of lower interest rates globally.

S&P’s forecasts include the full consolidation of ISS starting in 2021 and the acquisition of remaining Clearstream Fund Center AG shares in 2022, but no other large acquisitions.