Moody's Investors Service affirmed the Ba3 corporate family rating for Equinix Inc. and assigned a B1 (LGD5) rating to the company's proposed new unsecured Euro notes offering.
The rating agency also affirmed Equinix's Ba3-PD probability of default rating, SGL-3 speculative grade liquidity rating and B1 (LGD5) unsecured debt rating.
Moody's revised the rating outlook on the company to steady from positive due to increased leverage connected with a series of recent debt-funded deals.
The rating agency expects Equinix's leverage to be roughly 6x (Moody's adjusted) pro forma for the purchases of Metronode, Infomart, and the announced bond issuance, with leverage staying above 4.5x (Moody's adjusted) in the long term due to Equinix's persistent mergers and acquisitions activity and its yearly cash deficits from high capital expenditure and dividends.
The rating agency feels that Equinix's growth profile, its pursuit of acquired assets at high multiples, and its real estate investment trust status are collectively irreconcilable with a near-term improvement in credit strength, as Equinix cannot meet the demands of growth and capital returns without a liberal use of debt capital.