Over $4.5 billion of rated debt on review for upgrade
New York, December 01, 2020 -- Moody's Investors Service ("Moody's") placed IHS
Markit Ltd.'s ("IHS Markit") Ba1 corporate family
rating, Ba1-PD probability of default rating ("PDR")
and Ba1 senior unsecured rating on review for upgrade. The outlook
was revised to rating under review from positive.
On Monday, S&P Global Inc. ("S&P Global",
A3 stable) announced that it would acquire IHS Markit in an all-stock
transaction. The acquisition is subject only to certain regulatory
approvals and is expected to close in the second half of 2021.
RATINGS RATIONALE
The rating review reflects Moody's anticipation that, following
the close of the acquisition by S&P Global, IHS Markit's
rated debt could remain an obligation of IHS Markit with or without the
explicit support of S&P Global, be exchanged for S&P Global
debt, be repaid or be refinanced. If the rated IHS Markit
debt remains outstanding after the purchase closes, it would benefit
from the positive credit impact of S&P Global as a potential source
of debt service, whether or not S&P Global provides explicit
support such as a guarantee. Moody's expects to conclude
the review once S&P Global's plan for the IHS Markit debt is
announced or effected. Moody's expects to withdraw IHS Markit's
ratings if the debt is repaid.
All financial metrics cited reflect Moody's standard adjustments.
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS
The ratings could be upgraded if S&P Global assumes the IHS Markit
debt, possibly by more than one notch. The ratings could
also be raised if IHS Markit maintains: 1) strong revenue and earnings
growth; 2) a track record of balanced financial policies including
the ability and willingness to maintain solid credit metrics throughout
an economic cycle and after concluding debt-funded acquisitions;
and 3) debt to EBITDA around 3 times.
Given the rating under review for upgrade, a negative rating action
is not likely in the near term. However, the ratings could
be downgraded if: 1) there is sustained erosion in IHS Markit's
earnings; 2) the company adopts more aggressive financial policies;
3) IHS Markit sustains debt to EBITDA above 4 times; or 4) free cash
flow to debt remains below 13%.
The principal methodology used in these ratings was Business and Consumer
Service Industry published in October 2016 and available at https://www.moodys.com/researchdocumentcontentpage.aspx?docid=PBC_1037985.
Alternatively, please see the Rating Methodologies page on www.moodys.com
for a copy of this methodology.
..Issuer: IHS Markit Ltd.
....Corporate Family Rating, Placed
on Review for Upgrade, currently Ba1
....Probability of Default Rating, Placed
on Review for Upgrade, currently Ba1-PD
....Senior Unsecured Regular Bond/Debenture,
Placed on Review for Upgrade, currently Ba1 (LGD4)
....Outlook, Changed To Rating Under
Review From Positive
..Issuer: IHS Inc.
....Senior Unsecured Regular Bond/Debenture,
Placed on Review for Upgrade, currently Ba1 (LGD4)
....Outlook, Changed To Rating Under
Review From Positive
IHS Markit provides information, research, analytics and other
services to enterprise and government customers in several industries.
Moody's expects FY2020 (ends November 30) revenue of over $4.2
billion.
REGULATORY DISCLOSURES
For further specification of Moody's key rating assumptions and
sensitivity analysis, see the sections Methodology Assumptions and
Sensitivity to Assumptions in the disclosure form. Moody's
Rating Symbols and Definitions can be found at: https://www.moodys.com/researchdocumentcontentpage.aspx?docid=PBC_79004.
For ratings issued on a program, series, category/class of
debt or security this announcement provides certain regulatory disclosures
in relation to each rating of a subsequently issued bond or note of the
same series, category/class of debt, security or pursuant
to a program for which the ratings are derived exclusively from existing
ratings in accordance with Moody's rating practices. For ratings
issued on a support provider, this announcement provides certain
regulatory disclosures in relation to the credit rating action on the
support provider and in relation to each particular credit rating action
for securities that derive their credit ratings from the support provider's
credit rating. For provisional ratings, this announcement
provides certain regulatory disclosures in relation to the provisional
rating assigned, and in relation to a definitive rating that may
be assigned subsequent to the final issuance of the debt, in each
case where the transaction structure and terms have not changed prior
to the assignment of the definitive rating in a manner that would have
affected the rating. For further information please see the ratings
tab on the issuer/entity page for the respective issuer on www.moodys.com.
For any affected securities or rated entities receiving direct credit
support from the primary entity(ies) of this credit rating action,
and whose ratings may change as a result of this credit rating action,
the associated regulatory disclosures will be those of the guarantor entity.
Exceptions to this approach exist for the following disclosures,
if applicable to jurisdiction: Ancillary Services, Disclosure
to rated entity, Disclosure from rated entity.
The ratings have been disclosed to the rated entity or its designated
agent(s) and issued with no amendment resulting from that disclosure.
These ratings are solicited. Please refer to Moody's Policy
for Designating and Assigning Unsolicited Credit Ratings available on
its website www.moodys.com.
Regulatory disclosures contained in this press release apply to the credit
rating and, if applicable, the related rating outlook or rating
review.
Moody's general principles for assessing environmental, social
and governance (ESG) risks in our credit analysis can be found at https://www.moodys.com/researchdocumentcontentpage.aspx?docid=PBC_1133569.
At least one ESG consideration was material to the credit rating action(s)
announced and described above.
The Global Scale Credit Rating on this Credit Rating Announcement was
issued by one of Moody's affiliates outside the EU and is endorsed
by Moody's Deutschland GmbH, An der Welle 5, Frankfurt
am Main 60322, Germany, in accordance with Art.4 paragraph
3 of the Regulation (EC) No 1060/2009 on Credit Rating Agencies.
Further information on the EU endorsement status and on the Moody's
office that issued the credit rating is available on www.moodys.com.
Please see www.moodys.com for any updates on changes to
the lead rating analyst and to the Moody's legal entity that has issued
the rating.
Please see the ratings tab on the issuer/entity page on www.moodys.com
for additional regulatory disclosures for each credit rating.
Edmond DeForest
VP - Senior Credit Officer
Corporate Finance Group
Moody's Investors Service, Inc.
250 Greenwich Street
New York, NY 10007
U.S.A.
JOURNALISTS: 1 212 553 0376
Client Service: 1 212 553 1653
Karen Nickerson
Associate Managing Director
Corporate Finance Group
JOURNALISTS: 1 212 553 0376
Client Service: 1 212 553 1653
Releasing Office:
Moody's Investors Service, Inc.
250 Greenwich Street
New York, NY 10007
U.S.A.
JOURNALISTS: 1 212 553 0376
Client Service: 1 212 553 1653