S&P downgrades ION Trading

S&P said it lowered the long-term issuer credit rating to B from B+ on ION Trading Technologies Ltd.

The agency also said it lowered to B from B+ the ratings on the €2.96 billion equivalent first-lien term loans and €35 million revolving credit facility.

These facilities have a recovery rating of 3, indicating 50% expected default recovery.

The outlook is stable.

ION Trading Technologies announced recently that it is planning to acquire Fidessa Group for a total enterprise value of €1.9 billion, S&P said.

ION aims to integrate Fidessa as a tuck-in acquisition and fund the transaction via an incremental first-lien term loan issuance of €1.7 billion, as well as €163 million in new equity contribution and €20 million of incremental revolving credit facility, the agency said.

S&P said it expects that the additional revolver will remain undrawn at closing.

The downgrades primarily reflect the proposed aggressive debt package used to fund the acquisition of Fidessa, which exceeds the threshold at the B+ rating level, the agency said.

Following the transaction, S&P said it estimates that the pro forma adjusted debt-to-EBITDA ratio of the combined group at closing will increase to about 11x, up from about 7x for ION Trading Technologies on a stand-alone basis in 2017.

The agency said it anticipates meaningful de-leveraging in the first two years following the transaction as a result of cuts in the combined group's operating cost base.

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