S&P affirms OpenLink on add-on

S&P said it affirmed the B- issuer credit rating on OpenLink International Holdings Inc., as well as a 3 recovery rating on its debt.

OpenLink International is raising $350 million in debt incremental to its existing term loan to fund its acquisitions of Reval and Aspect, two software-as-a-service risk management software platforms, S&P said.

While the acquisitions will improve OpenLink's recurring revenue profile and product diversity, leverage will continue to be high over the next couple of years, the agency said.

The ratings reflect an expectation that the company's pro forma leverage will be mid-7x at the end of 2019 with a limited operating scale in a fragment market, S&P said.

The company is facing competitive pressure from larger companies with significant financial resources, the agency added.

This is offset by its improving EBITDA margins from material cost cuts, low customer concentration and improving recurring revenue base, S&P said.

The stable outlook reflects our expectation that the company will meet most of its cost-reduction targets and maintain stable revenue, allowing it to meet higher debt amortizations later this year, the agency said.

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