S&P keeps LSE Group's debt rating on CreditWatch negative

31 July 2020

(Sharecast News) - Credit analysts at S&P Global Ratings kept their rating on London Stock Exchange Group's long-term debt on 'CreditWatch negative'following the company's announcement that it might sell its interest in MTS or its stake in Borsa Italiana Group, pending further information on the scope of any asset sale.
LSE Group's confirmation that talks for a sale were ongoing could smooth the path to regulatory approval for its proposed all-share purchase of Refinitiv.

"While the group's revenue streams would be less diverse as a result, management might choose to use sale proceeds arising from its Italian businesses to lower leverage at the close of the Refinitiv transaction, and so support the group's financial metrics," S&P added.

Nonetheless, the analysts also said that the scope and scale of any divestment was unclear at the present time so the implications for the company's debt ratings were "uncertain".

On the basis of the preliminary communications from both groups and its base case estimates for the combined company, S&P said the acquisition would result in a "significant" increase in leverage.

"On this basis, we see a substantial likelihood of an up to two-notch lowering of the long-term ratings, and a one-notch lowering of the short-term ratings, on LSEG.

"As details on any sale unfold, we will further consider the attendant rating implications."