Fitch upgrades Sophos

Fitch Ratings said it upgraded Surf Intermediate I Ltd.’s (Sophos) long-term issuer default rating to B from B- and first-lien secured facilities’ rating to B/RR4/40% from B-/RR4/49%.

Sophos’ upgrade indicates stronger than expected operational and financial performance in FY21 (ending March 2021) and Fitch’s expectation that funds from operations (FFO) gross leverage will drop below 7.5x at end-FY21 from 10x in FY20 and then continue to decline, the agency said.

Fitch said the company demonstrated efficient cost optimization after the LBO in March 2020, which resulted in strong EBITDA growth in nine months of FY21. Most one-off costs related to the optimization program were incurred in the first half of FY21. Increased demand for cybersecurity services due to the mass adoption of work-from-home models by businesses due to the pandemic supported the strong performance.

The outlook is stable.

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