Flutter sells $1.05 billion in BBB-rated debt
Flutter Entertainment (NYSE: FLUT ), the parent company of FanDuel, today announced the sale of $1.05 senior secured notes due 2029.
Proceeds from the debt sale, which includes U.S. dollar and euro-denominated bonds, will be used to repay borrowings under a credit facility completed in July 2018, as well as "to repay borrowings under an existing multi-currency revolving credit facility" to a Dublin-based gaming company .
The announcement marks Flutter's debt sale since its listing on the New York Stock Exchange (NYSE) in January, a move aimed at bolstering investment in a broader investor base and improving the company's access to capital markets.
Currently, Flutter's primary listing is on the London Stock Exchange (LSE), but the company plans to ask investors at its annual meeting next month to move its primary listing to the New York Stock Exchange.
Flutter debt outlook raised to positive
In a report released today, S&P Global Ratings rated Flutter's new debt offering at "BBB-" while affirming the gaming company's credit rating at "BB+." The research firm also upgraded its outlook on the operator's credit profile to "positive" from "stable."
The positive outlook suggests that if Flutter continues to demonstrate solid operating performance driven by expectations for significant growth in the U.S. business, credit metrics trend toward 3.0x, S&P Global's "rating-adjusted leverage and strong free operating cash flow (FOCF) )) power generation while maintaining consistent financial policies that support stronger performance and credit metrics," S&P noted.
Flutter owns 95% of FanDuel, the largest online sportsbook in the United States. The company's U.S. operations are an increasingly important part of its overall profitability and its fastest-growing segment, underscoring FanDuel's relevance within Flutter's broader investment thesis.
“Flutter expects the U.S. sports betting and iGaming market to grow from $9 billion in 2022 to over $40 billion by 2030. Flutter has a leading market position in the U.S., accounting for 53.4% of the online sports betting market share % (S&P adds:
Flutter can pay down debt with strong free cash generation
If Flutter continues to deliver impressive FOCF generation in the U.S. while maintaining leverage in the 3x to 3.5x range, the company could improve its junk credit rating.Free Cash Flow is a quality measure and indicator of a company's ability to meet its debt obligations.
S&P believes Flutter is on a solid FOCF path - which could lead to improved credit metrics going forward.
"We expect Flutter's expected earnings growth to significantly increase FOCF generation over the medium term, taking the group to close to $600-700 million in 2024 and approximately $1.0-1.2 billion by 2025," the the research firm concluded.
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Source: www.casino.org
