S&P Global Ratings on March 26 lowered Finastra Group Holdings Ltd.'s long-term issuer credit rating to B- from B, with a stable outlook.
The U.K.-based financial services software provider was formed through the merger of Misys and DH Corp. in June 2017.
S&P said the downgrade was due to the faster-than-expected progress of Finastra's transition of legacy Misys customers to a subscription-fee pricing model from the previous model of high initial license fees and subsequent lower annual maintenance fees. This caused the agency to lower the ratings in response to its forecast that credit metrics for financial years 2018 and 2019 would be weaker than previously expected.
Meanwhile, the stable outlook reflects S&P's expectation that Finastra will generate positive adjusted free operating cash flow over 2018, excluding direct nonrecurring outflows linked to the DH Corp. merger, and improve free operating cash flow over to debt to about 3% in 2019.
This S&P Global Market Intelligence news article may contain information about credit ratings issued by S&P Global Ratings, a separately managed division of S&P Global. Descriptions in this news article were not prepared by S&P Global Ratings. The original S&P Global Ratings documents referred to in this news brief can be found here.