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CONSUMER CYCLICALS: Flutter (Secured; Ba1/BBB- Pos/BBB) S&P affirms at BBB- Pos

CONSUMER CYCLICALS
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The last of the three to comment and the only one we would have expected some risk to - but it has also stayed put and on positive outlook. Flutter continues to prove if operating performance is stellar - and one has a history of synergistic acquisitions - raters will brush past leverage thresholds. Please note the first point below.

  • It looks like debt funding is coming for most of the €2.6b in acquisitions; S&P says it has obtained a €2.5b bridge facility. It expects refi once transaction closes in 1H25 (reminder guidance is for €2.3b Snai sale to close in 2Q).
  • We revise up pro-forma gross leverage (incl. leases) to end this year at 3.7x while net remains unch at 3.1x. Reminder Fitch sees '25 leverage at 3.2x vs. ceiling of 3.5x while Moody's has gross at 4x by year-end.
  • S&P will stay on pos. outlook despite expectation for its adj. leverage to be in 3-3.5x range over medium-term (it sees as eqv. to high-end of company targeted net 2-2.5x). It will upgrade as long as leverage stays in that range and US market share continues to grow.
  • On the $5b buyback programme over next 3-4yrs it announced last week - S&P points to the 2027 targets given with that which included adj. EBITDA >$5b (more than double from this year).
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The last of the three to comment and the only one we would have expected some risk to - but it has also stayed put and on positive outlook. Flutter continues to prove if operating performance is stellar - and one has a history of synergistic acquisitions - raters will brush past leverage thresholds. Please note the first point below.

  • It looks like debt funding is coming for most of the €2.6b in acquisitions; S&P says it has obtained a €2.5b bridge facility. It expects refi once transaction closes in 1H25 (reminder guidance is for €2.3b Snai sale to close in 2Q).
  • We revise up pro-forma gross leverage (incl. leases) to end this year at 3.7x while net remains unch at 3.1x. Reminder Fitch sees '25 leverage at 3.2x vs. ceiling of 3.5x while Moody's has gross at 4x by year-end.
  • S&P will stay on pos. outlook despite expectation for its adj. leverage to be in 3-3.5x range over medium-term (it sees as eqv. to high-end of company targeted net 2-2.5x). It will upgrade as long as leverage stays in that range and US market share continues to grow.
  • On the $5b buyback programme over next 3-4yrs it announced last week - S&P points to the 2027 targets given with that which included adj. EBITDA >$5b (more than double from this year).