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S&P, Moody's to review LSE ratings in light of Refinitiv deal

Rating agencies S&P Global Ratings and Moody's are both reviewing their ratings on London Stock Exchange Group PLC after the exchange group agreed to acquire financial data analytics platform Refinitiv.

S&P Global Ratings on Aug. 1 placed its A/A-1 long- and short-term issuer credit ratings on LSE Group, and the AA-/A-1+ long- and short-term issuer credit ratings on LCH Ltd. and LCH SA, on CreditWatch with negative implications, with the placements reflecting the agency's expectations of an up to two-notch lowering of its long-term ratings and of an up to one-notch lowering of its short-term ratings on these entities.

The agency expects the deal completion and concurrent resolution of the CreditWatch placement no sooner than the second half of 2020, after relevant stakeholder approvals and transfer of ownership.

Meanwhile Moody's on Aug. 2 placed LSE Group's A3 local- and foreign-currency long-term issuer and currency senior unsecured debt ratings on review for downgrade. The positive outlook on the group was also placed on review for downgrade. Moody's affirmed the group's Prime-2 local- and foreign-currency commercial paper ratings.

Moody's also placed LSE Group unit London Stock Exchange PLC's A3 long-term local- and foreign-currency issuers ratings on review for downgrade. The positive outlook on the firm was also placed on review for downgrade.

Moody's said the review would focus on LSE Group's acquisition and integration of Refinitiv. The most likely outcome would be a one-notch downgrade of the group's long-term ratings to Baa1 from A3, Moody's added. Also, London Stock Exchange's ratings would likely be moved to maintain an equivalent rating level with LSE Group, as a result of close financial and business ties between the companies.

LSE Group's acquisition of Refinitiv would be a complex transaction because of the latter's greater revenue and differing business activities with a broader customer base, compared to the British group, which would present it with significant management and operational challenges during the integration period, the agency said.

On the other hand, Moody's on Aug. 1 placed Refinitiv's B3 corporate family rating and B3-PD probability of default rating on review for upgrade, with the outcome of the review dependent on the nature of LSE Group's support for Refinitiv's existing debt that remains in the capital structure post-combination and the position of such debt within the British company's capital structure, the agency said.

Moody's said it will withdraw all of Refinitiv's ratings upon repayment of the debt obligations.

This S&P Global Market Intelligence news article may contain information about credit ratings issued by S&P Global Ratings. Descriptions in this news article were not prepared by S&P Global Ratings.