S&P lowers Black Knight view to stable

S&P said it revised Black Knight Inc.'s outlook to stable from positive.

The agency also said it affirmed the company's BB issuer credit rating, along with the BB+ rating on the company's secured debt.

Black Knight continues to operate with leverage higher than the upgrade leverage threshold of 3x, primarily as a result of a $375 million debt-funded minority equity investment in Dun and Bradstreet, the agency explained.

Pro forma for the investment as of Dec. 31, 2018, leverage increased to 3.7x from 2.9x, S&P said, and is expected to remain higher than 3x through 2019.

The outlook revision to stable from positive reflects an expectation that adjusted leverage will stay higher than a 3x previous upgrade threshold through 2019, the agency said.

The ratings are affected by the agency's increasingly unfavorable opinion of Black Knight's board of directors' independence and governance practices, S&P explained.

The agency said it views the Dun and Bradstreet investment and talent transfer as primarily benefiting parties related to the board of directors, such as Cannae Holdings Inc., Thomas H. Lee Partners and CC Capital, which have made significant investments into Dun and Bradstreet.

The stable outlook reflects our expectation for strong operating performance

in 2019, primarily driven by mid-single-digit revenue growth and healthy EBITDA margins in the low 40% range, S&P said.

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