Lexmark Assigned BBB- Stock Rating Due To $1.2 Billion of Debt
Fitch Assigns Initial 'BBB-' Ratings to Lexmark International; Outlook Stable
NEW YORK, Aug 11, 2014 (BUSINESS WIRE) — Fitch Ratings has assigned initial ratings to Lexmark International, Inc. (Lexmark) as follows:
–Issuer Default Rating (IDR) 'BBB-';–Senior unsecured revolving credit facility (RCF) 'BBB-'; and–Senior unsecured debt 'BBB-'.The Rating Outlook is Stable.
Fitch's action affects approximately $1.2 billion of debt, including Lexmark's undrawn $500 million RCF.
KEY RATING DRIVERS
The ratings and Outlook reflect Lexmark's:–Consistent FCF from recurring revenue: Fitch expects free cash flow will remain above $225 million annually supported by annuity revenue that represents approximately 70% of total revenue. The growth of annuity revenue provides a more predictable revenue stream that reduces volatility in an economic downturn.