Fitch assigns Qnity first-time BB+ IDR, rates term loan B

Fitch assigns Qnity first-time BB+ IDR, rates term loan B

Fitch Ratings has assigned Qnity, a global intelligence and data analytics company, a first-time Issuer Default Rating (IDR) of 'BB+' and upgraded its senior secured debt to 'B' with a Stable outlook [1]. This upgrade comes on the heels of Qnity's strong performance in 2024, marked by solid revenue growth and successful execution of cost-saving initiatives.

The upgrade reflects Qnity's recent initial public offering (IPO), which raised approximately $1 billion. Proceeds from the IPO were primarily used for debt reduction, with the company having already paid off its $563 million revolving credit facility balance and planning to reduce its term-loan debt by roughly $490 million [1]. Fitch expects Qnity to finish 2025 with leverage near or below 4.5x, a positive sensitivity threshold previously identified by the rating agency [1].

Qnity's operating performance in 2024 was notable, with organic growth of 6% and EBITDA margin expansion. Fitch anticipates the company will achieve EBITDA margins at or above 20% in 2025, though this remains below the roughly 40% average among broader data analytics and processing peers [1]. Free cash flow conversion is expected to improve in 2025, with Fitch projecting margins of 5% or greater in the next 12-18 months [1].

The business combination with GfK appears to be progressing positively, with many large customers renewing multiyear contracts. Fitch views this as confirmation that the combined company is moving toward market leadership in the retail measurement sector [1].

For 2025, Fitch’s key assumptions include revenue growth of approximately 4%, EBITDA margin expansion approaching 20%, slightly reduced capital intensity, and no acquisitions, dividends, or share repurchases [1].

References:

[1] https://www.investing.com/news/stock-market-news/niq-upgraded-to-bb-by-fitch-on-strong-performance-and-debt-reduction-93CH-4168130