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CONSUMER CYCLICALS: Flutter (Ba1/BBB- Pos/BBB) UK considering doubling taxes

CONSUMER CYCLICALS
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To be exact we move up expected gross leverage to end this year at 4x (prev. 3.7x) and net at 3.4x (prev. 3.1x).

  • Reminder S&P stayed on positive outlook even after the acquisition spree on a expectation co will eventually delever into S&P adj. 3-3.5x. Fitch is the most lenient seeing '25 leverage at 3.2x vs. ceiling of 3.5x.
  • Moody's was the harshest despite still being in HY; it saw gross "moderately above 4x" by year-end and downgrade risk if it was sustained above 4x.

We do not expect rating risk on today's headlines - but do expect raters to comment with their views on the impact. S&P coming off positive and Moody's moving to neg. outlook seem the most likely if we were to see rating action. As we have voiced in the past we do question how seriously flutter takes its leverage targets (given little recent history of operating within it). Positively it held equity-pay-outs mute while it invested in itself - but a recently announced $5b buyback over next 3-4yrs was a change to that. It reiterated then buybacks would only commence once leverage was at or close to target.

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To be exact we move up expected gross leverage to end this year at 4x (prev. 3.7x) and net at 3.4x (prev. 3.1x).

  • Reminder S&P stayed on positive outlook even after the acquisition spree on a expectation co will eventually delever into S&P adj. 3-3.5x. Fitch is the most lenient seeing '25 leverage at 3.2x vs. ceiling of 3.5x.
  • Moody's was the harshest despite still being in HY; it saw gross "moderately above 4x" by year-end and downgrade risk if it was sustained above 4x.

We do not expect rating risk on today's headlines - but do expect raters to comment with their views on the impact. S&P coming off positive and Moody's moving to neg. outlook seem the most likely if we were to see rating action. As we have voiced in the past we do question how seriously flutter takes its leverage targets (given little recent history of operating within it). Positively it held equity-pay-outs mute while it invested in itself - but a recently announced $5b buyback over next 3-4yrs was a change to that. It reiterated then buybacks would only commence once leverage was at or close to target.

Keep reading...Show less