S&P lowers Finastra

S&P said it lowered its long-term issuer credit rating to B- from B on Finastra Ltd. The outlook is stable.

At the same time, S&P lowered to B- from B its issue ratings on the $4.6 billion equivalent first-lien term loans and the $400 million revolving credit facility. These facilities have a recovery rating of 3 (60%).

S&P also lowered to CCC from CCC+ the issue rating on the $1.245 billion second-lien term loan, with a recovery rating of 6 (0%).

Finastra was formed through the merger of Misys and D+H in June 2017. Following the merger, Finastra decided to transition legacy Misys customers to a subscription-fee pricing model from the previous model of high initial license fees (ILFs) and subsequent lower annual maintenance fees.

“The new pricing model essentially spreads out the significant upfront ILF component of a customer contract over the term of the contract and we expect this to weigh on the company's revenues and cash flows over the next two fiscal years,” S&P said in a news release.

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