The Intercontinental Exchange Inc.’s (ICE) potential dalliance with eBay Inc. is a negative for the exchange giant’s credit ratings, said Moody’s Investors Service in a new report.
The rating agency said that ICE’s apparent interest in large, complex transactions outside of its core business — operating regulated exchanges, clearing houses in multiple asset classes and data services — poses heightened risks.
As a result, Moody’s has put the exchange’s ratings on review for possible downgrade.
While ICE said that it has put an end to efforts to find strategic opportunities with the auction site operator, Moody’s said that the exploration outside of its core expertise in financial markets nevertheless represents a negative.
“In having pursued these opportunities, and in its related commentary on how it perceives its competitive strengths, ICE has revealed a possible stronger appetite for pursuing large, transformative and complex strategic transactions, increasing associated event risk,” it said.
The company’s appetite for financing large acquisitions with significant amounts of debt “is credit negative, even though the company is committed to quickly delevering after M&A transactions and has a strong track record of doing so,” it said.
“In assessing ICE’s creditworthiness, we will explore its strategic objectives and its financial policies when considering higher-risk opportunities, and assess its corporate governance practices when evaluating strategic options and related risks,” Moody’s said.