Intercontinental Exchange, Inc. 'A/A-1' Ratings Affirmed; Outlook Remains Stable

  • Current elevated volatility in the markets has led to a surge in trading volume across asset classes, which should benefit Intercontinental Exchange, Inc.'s (ICE's) profitability and support relatively stable leverage metrics this year.
  • However, the company has a high appetite for mergers and acquisitions (M&A) in our view, reflecting a greater risk of increased leverage relative to our base-case forecast. We are therefore revising our view of the company's financial policy assessment to negative.
  • We are affirming our 'A/A-1' long- and short-term issuer credit ratings on ICE, reflecting strong business position, profitability, and relatively low leverage.
  • The stable outlook reflects S&P Global Ratings' expectation that ICE's ratio of debt to EBITDA will remain below 2.5x and that funds from operations to debt will remain above 32% in the next two years.
TORONTO (S&P Global Ratings) March 26, 2020--, S&P Global Ratings affirmed its 'A/A-1' long-and short-term issuer credit ratings on Intercontinental Exchange, Inc. (ICE). The outlook on the long-term issuer credit ratings remains stable. At the same time, we affirmed the 'A' senior unsecured debt rating on ICE.
Our ratings on ICE reflect its strong competitive position among exchanges and clearinghouses across multiple asset classes and regions, high proportion of stable and recurring revenues compared with that of most peers, and capacity to generate strong cash flow from operations. We believe these strengths are partially offset by the high operational risk arising from processing huge volumes of transactions every day and a financial policy that has turned more aggressive than we had previously anticipated.
The stable outlook reflects S&P Global Ratings' expectation that ICE's debt to EBITDA ratio will remain below 2.5x and that FFO to debt will remain above 32% in the next two years. It also reflects our expectation that the company will maintain its strong market position in most of the business segments in which it operates, with growth in the data services segment spurring organic growth overall.
We could lower the ratings if leverage increases substantially, either because of another large acquisition, shareholder-friendly capital policies, or weaker-than-expected profitability. This would be the case, in particular, if debt to EBITDA were to exceed 2.5x (from an estimated 2.2x at the end of December 2019) or if FFO to debt were to deteriorate below 32% (from an estimated 34% at the end of December 2019). We could also lower the ratings if the financial safeguards at ICE's clearinghouses unexpectedly deteriorate.
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