S&P cuts NYSE Euronext outlook on finance strains
3 August 2012
, by Ben Fox (MarketWatch)http://www.marketwatch.com/story/sp-cuts-nyse-euronext-outlook-on-finance-strains-2012-08-03Standard & Poor's Ratings Services lowered its outlook on NYSE Euronext to negative from stable, saying the company was focusing too much on shareholder-friendly actions at a time of strained finances and lower trading volumes
S&P also affirmed the exchange operator's investment-grade rating of A-plus, which is six notches above a junk-level rating.
The rating company said the operator of the New York Stock Exchange spent about $450 million on share buybacks and dividends in the first half of the year, while it had $400 million in funds from operations.
Due to those payouts, the company would likely need to refinance all or part of its $750 million in debt due June 2013, instead of paying it down.
S&P warned if the company can't strengthen liquidity so it can cover at least six months of operating costs, the rating company will consider a downgrade.
Following its failed plans for a tie-up with Deutsche Boerse AG -
- the European Union blocked the merger earlier this year on antitrust grounds, as the merged entity would have had a 93% share of Europe's on-exchange derivatives business -
- NYSE Euronext has pushed forward with a revamped two-year standalone plan aimed at increasing profit and cutting $250 million in costs by 2014.
Friday, NYSE Euronext said its second-quarter income fell due to lower trading volume, mainly in derivatives.
The company said global economic uncertainty has dampened trading and technology spending, which it sees likely persisting through next year.
Shares were up 1.2% at $24.88 in a broad market uptick, though the stock is down 4.7% so far this year.