Fitch revises Rackspace to stable

Fitch Ratings said it affirmed Rackspace Hosting, Inc.'s long-term issuer default rating at BB- and revised the outlook to stable from positive.

The agency also affirmed the senior secured revolving credit facility and senior secured term loan at BB+/RR1 and senior unsecured notes at BB-/RR4.

Rackspace announced on Sept. 11 that it will acquire Datapipe Holdings, LLC with a combination of equity and debt issuance.

“Fitch expects the acquisition will delay the deleveraging that was previously expected. Fitch now expects the total leverage to remain above 4x through 2018. The acquisition is expected to close during the fourth quarter of 2017 (4Q17),” the agency said in a news release.

“Fitch believes the BB- IDR rating reflects the agency's view of a strong strategic fit of the acquisition. The revision of the outlook to stable reflects the delayed deleveraging as a result of the acquisition.”

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