S&P Lifts Outlook on SS&C Technologies (SSNC) to Stable; Ratings Afifrmed

S&P Global Ratings today said it revised its outlook on SS&C Technologies Inc. (Nasdaq: SSNC) to stable from negative and affirmed the 'BB' corporate credit rating.

At the same time, we affirmed our 'BB' issue-level rating, with a recovery rating of '3', on the company's secured credit facility, which consists of a $150 million revolving credit facility (undrawn as of March 31, 2016) and $2.48 billion term loan ($2.19 billion outstanding as of March 31, 2016). The '3' recovery rating indicates our expectation for a meaningful (50% to 70%; higher half of the range) recovery in the event of a payment default.

We also affirmed our 'B+' issue-level rating, with a recovery rating of '6', on the company's $600 million senior unsecured notes. The '6' recovery rating indicates our expectation for a negligible (0% to 10%) recovery in the event of a payment default.

"The outlook revision reflects SS&C's achievement of a majority of the planned synergies from the Advent acquisition and the repayment of debt from free cash flow generation," said S&P Global Ratings credit analyst Peter Bourdon.

We had revised the outlook to negative in June 2015 following the company's announcement of its debt-financed acquisition of Advent for $2.7 billion and re-leveraging of the capital structure to about 5.7x. The company's leverage, now down to about 5x as of March 31, 2016, has benefitted from its growing EBITDA base from the additional equity-financed acquisitions of Primatics Financial in November 2015 for $116 million and Citigroup's Alternative Investor Services for $321 million in March 2016. While we expect the company to continue operating as a consolidator, we expect it to use the majority of free cash flow over the next year to repay debt and decrease leverage.

The stable outlook reflects our expectation that the company will continue to achieve organic revenue growth and EBITDA margin expansion from acquisition synergies and that leverage will continue declining from its current leverage level around 5x mostly due to debt reduction.

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