S&P lowers Campaign Monitor

Standard & Poor’s said it lowered the long-term rating on Campaign Monitor Finance Pty Ltd. and term loan B debt facility to B- from B.

The recovery rating on the term loan remains at 4.

The outlook is stable.

The downgrades reflect a view that Campaign Monitor’s significant investment in its operations will materially reduce its profitability and earnings in the year ending June 30, S&P said.

The group’s financial risk profile is expected to worsen significantly with its debt-to-EBITDA increasing to the 6.5x to 7x range in fiscal 2016, S&P said, before declining modestly in fiscal 2017.

Campaign Monitor is investing heavily in building out its sales, marketing and back-office functions to support revenue growth over the next few years, the agency added.

The ratings also consider the group’s narrow product mix, small earnings base, relatively low barriers to entry and strong competition, S&P said.

Tempering these factors are the group’s high profit margins, low capital intensity, diverse customer base and growing global demand for e-mail marketing products and services, the agency said.

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