S&P Global Ratings has revised its outlook on operator of global exchanges and clearing houses and provider of mortgage technology, data and listing services Intercontinental Exchange Inc (NYSE:ICE) to stable from negative. S&P also affirmed its ‘BBB+’ long-term and ‘A-2’ short-term issuer credit ratings and its ‘BBB+’ issue rating on the company’s senior unsecured debt.
The outlook revision reflects faster improvement in ICE’s leverage metrics compared with what S&P initially anticipated during the Ellie Mae acquisition, through solid cash flow generation, reflecting strength across its businesses.
S&P notes ICE’s strong performance in 2020 on solid results across its businesses, despite relative weak spots in listings and fixed-income execution revenues (compared with peers).
For the full year of 2020 consolidated net income attributable to ICE was $2.1 billion on $6.0 billion of consolidated revenues less transaction-based expenses. Full year 2020 GAAP diluted EPS were $3.77. On an adjusted basis, net income attributable to ICE for the year was $2.5 billion and adjusted diluted EPS were $4.51, up 16% year-over-year.
Full year 2020 consolidated net revenues were $6.0 billion, up 16% year-over-year including exchange net revenues of $3.6 billion, fixed income and data services revenues of $1.8 billion and ICE Mortgage Technology revenues of $595 million.
In addition, S&P notes that, in January 2021, the European Commission adopted an equivalence decision that the SEC regime for U.S. CCPs is equivalent to the EU rules. As a result, EU-based clearing members can now clear the single-name credit default swaps at U.S.-based ICE Clear Credit under favorable conditions.
The stable outlook reflects S&P Global Ratings’ expectation that ICE will maintain its strong market position in most of the business segments it operates in, with data services spurring organic growth. It also reflects S&P’s expectation that ICE’s debt to EBITDA ratio will remain below 3.5x and funds from operations (FFO) to debt will remain above 23% in the next two years.