S&P assigns BBB to Equinix notes

S&P said it assigned its BBB issue-level rating to the planned unsecured notes to be issued by Equinix Inc.'s wholly owned core financing subsidiary Equinix Europe 1 Financing Corp. LLC. Equinix Europe does not hold any assets or operations, though the notes will be guaranteed by its parent, Equinix.

“Given that the other operating subsidiaries do not guarantee the debt, it will be structurally subordinated to the liabilities at other entities, which total about $2.6 billion, including about $2 billion of finance lease liabilities and about $600 million in debt primarily consisting of Japanese yen-denominated notes. Still, we do not view this debt instrument as significantly subordinated to the company's other debt, therefore the issue-level rating is in line with our BBB long-term issuer credit rating,” the agency said in a press release.

Equinix plans to use the proceeds for general corporate purposes, which may include capital expenditures.

“We view the transaction as credit neutral because our base-case scenario already assumed the company's S&P Global Ratings-adjusted debt to EBITDA would be about 4x-5x over the next two to three years, which is consistent with our expected range for the current rating,” S&P said.

The outlook is stable.

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