We use cookies to understand how you use our site and to improve your experience. This includes personalizing content and advertising. To learn more, click here. By continuing to use our site, you accept our use of cookies, revised Privacy Policy and Terms of Service.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
CBOE Holdings' Unsecured Debt Issuance Rated by Moody's
Read MoreHide Full Article
CBOE Holdings, Inc.’s (CBOE - Free Report) proposed $1.65 billion senior unsecured debt issuance recently received rating action from Moody’s Investors Service, a wing of Moody’s Corp. (MCO - Free Report) . The rating agency has assigned a provisional rating of (P)Baa1 to this debt issuance with a stable outlook.
The aforesaid rating action pertains to CBOE Holdings’ recent definitive agreement to acquire Bats Global Markets, Inc. for a total of $3.2 billion. The acquisition will be a combination of cash and stock transaction. The stable outlook indicates that the deal is likely to complete as per schedule and without any significant obstacles or adverse developments. CBOE Holdings is expected to be able to de-lever post the acquisition. After the final terms have been reviewed, the provisional rating will be converted to a definitive rating upon completion of the deal.
The rating action reflects CBOE Holdings’ solid track record of stable earnings and continuous cash flow generation and a compelling suite of proprietary products. Upon closure, the acquirer is anticipated to experience greater revenue diversification, lesser reliance on transaction-based revenues and realize reasonable expense synergies.
Notably, the acquisition will mark CBOE Holdings’ first financial leverage utilization as the company will be taking on substantial debt. The rating agency has estimated that this business combination will result in 2.5x debt/EBITDA and interest coverage between 10x and 15x (dependent on pricing).
Nevertheless, factors that can lead to a rating upgrade include sustained organic growth, which will improve the stability of cash flows post closure, realizing estimated benefits of technology integration from the buyout and leverage less than 2.0x debt/EBITDA.
On the other hand, a rating downgrade might result from considerable adverse developments arising from the combination of this transaction. These might include the loss of key personnel, systems, risk management or compliance issues, to name a few.
In addition, changes in regulatory or market structure resulting in significantly lower trading and transaction volumes, operational failure leading to service disruption and financial losses and leverage more than 2.5x debt/EBITDA can also lead to a rating downgrade
Rating affirmations or upgrades from credit rating agencies play an important role in retaining investors’ confidence in the stock as well as maintaining credit worthiness in the market. Hence, it is expected that such ratings will help the company write more business in the future.
Currently, CBOE Holdings carries a Zacks Rank #4 (Sell).
National Interstate, a specialty property and casualty insurer, saw its Zacks Consensus Estimate increasing 7.6% and 7.3% for 2016 and 2017 respectively, over the last 60 days.
Confidential from Zacks
Beyond this Analyst Blog, would you like to see Zacks' best recommendations that are not available to the public? Our Executive VP, Steve Reitmeister, knows when key trades are about to be triggered and which of our experts has the hottest hand. Click to see them now>>
See More Zacks Research for These Tickers
Normally $25 each - click below to receive one report FREE:
Image: Bigstock
CBOE Holdings' Unsecured Debt Issuance Rated by Moody's
CBOE Holdings, Inc.’s (CBOE - Free Report) proposed $1.65 billion senior unsecured debt issuance recently received rating action from Moody’s Investors Service, a wing of Moody’s Corp. (MCO - Free Report) . The rating agency has assigned a provisional rating of (P)Baa1 to this debt issuance with a stable outlook.
The aforesaid rating action pertains to CBOE Holdings’ recent definitive agreement to acquire Bats Global Markets, Inc. for a total of $3.2 billion. The acquisition will be a combination of cash and stock transaction. The stable outlook indicates that the deal is likely to complete as per schedule and without any significant obstacles or adverse developments. CBOE Holdings is expected to be able to de-lever post the acquisition. After the final terms have been reviewed, the provisional rating will be converted to a definitive rating upon completion of the deal.
The rating action reflects CBOE Holdings’ solid track record of stable earnings and continuous cash flow generation and a compelling suite of proprietary products. Upon closure, the acquirer is anticipated to experience greater revenue diversification, lesser reliance on transaction-based revenues and realize reasonable expense synergies.
Notably, the acquisition will mark CBOE Holdings’ first financial leverage utilization as the company will be taking on substantial debt. The rating agency has estimated that this business combination will result in 2.5x debt/EBITDA and interest coverage between 10x and 15x (dependent on pricing).
Nevertheless, factors that can lead to a rating upgrade include sustained organic growth, which will improve the stability of cash flows post closure, realizing estimated benefits of technology integration from the buyout and leverage less than 2.0x debt/EBITDA.
On the other hand, a rating downgrade might result from considerable adverse developments arising from the combination of this transaction. These might include the loss of key personnel, systems, risk management or compliance issues, to name a few.
In addition, changes in regulatory or market structure resulting in significantly lower trading and transaction volumes, operational failure leading to service disruption and financial losses and leverage more than 2.5x debt/EBITDA can also lead to a rating downgrade
Rating affirmations or upgrades from credit rating agencies play an important role in retaining investors’ confidence in the stock as well as maintaining credit worthiness in the market. Hence, it is expected that such ratings will help the company write more business in the future.
Currently, CBOE Holdings carries a Zacks Rank #4 (Sell).
CBOE HOLDINGS Price
CBOE HOLDINGS Price | CBOE HOLDINGS Quote
Stock to Consider
A better-ranked stock from the finance sector is National Interstate Corporation (NATL - Free Report) , which sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
National Interstate, a specialty property and casualty insurer, saw its Zacks Consensus Estimate increasing 7.6% and 7.3% for 2016 and 2017 respectively, over the last 60 days.
Confidential from Zacks
Beyond this Analyst Blog, would you like to see Zacks' best recommendations that are not available to the public? Our Executive VP, Steve Reitmeister, knows when key trades are about to be triggered and which of our experts has the hottest hand. Click to see them now>>