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Intercontinental Exchange Offers $6.5 Billion Senior Notes

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Intercontinental Exchange, Inc. (ICE - Free Report) announced the pricing of $6.5 billion aggregate principal amount of senior unsecured notes.

The senior notes consist of $1.25 billion in aggregate principal amount of Floating Rate Notes, which are scheduled to mature in 2023; $1 billion in aggregate principal amount carrying an interest rate of 0.700% and scheduled to mature in 2023; $1.5 billion in aggregate principal amount carrying an interest rate of 1.850%, scheduled to mature in 2032; and $1.25 billion in aggregate principal amount, carrying an interest rate of 2.650% and scheduled to mature in 2040. The remaining notes of $1.5 billion in aggregate principal amount carry an interest rate of 3.000%. These are scheduled to mature in 2060.

Intercontinental Exchange aims to deploy the net proceeds from the sale of the Notes along with the issuance of commercial paper, borrowings under its revolving credit facility and borrowings under a new senior unsecured term loan facility, to pay for the acquisition of Ellie Mae Intermediate Holdings , Inc. and its indirect wholly owned subsidiary, Ellie Mae, Inc. per the stock purchase agreement declared on Aug 6, 2020.

The company displayed prudence by issuing senior notes amid a low interest rate environment to procure funds and enhance financial flexibility without affecting liquidity. As of Jun 30, 2020, Intercontinental Exchange’s cash balance increased 4.6% to $880 million from 2019 end level.

The debt level of the company has decreased over the last few years and its debt to capital has improved. However, as of Jun 30, 2020, total debt of the company was about $8 billion, up 44% from 2019 end. The debt-to-capital ratio on Jun 30, 2020 was 31.9, down 770 basis points from 2019 end and compared unfavorably with the industry average of 23.8. The latest offering will increase the debt-to-capital ratio by 1410 basis points.

Nonetheless, the firm’s times interest earned of 10.2 as on Jun 30, 2020 is better when compared with the 2019 end figure of 9.7. The improvement in this ratio indicates that the firm will be able to meet current obligations in the near future without any difficulties.

By capitalizing on the low interest rate environment, the company is also attempting to reduce its interest burden, thus facilitating margin expansion. Also, the company’s operational strength should enable it to service debt uninterruptedly, thereby maintaining the stock’s creditworthiness.

Shares of this Zacks Rank #4 (Sell) company have outperformed the industry in a year’s time. The stock has gained 13.4% compared with the industry’s increase of 1.9%.


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Some better-ranked stocks from the finance sector include MarketAxess Holdings Inc (MKTX - Free Report) , Equitable Holdings, Inc. (EQH - Free Report) , and OTC Markets Group Inc. (OTCM - Free Report) , each carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

MarketAxess operates an electronic trading platform that enables fixed-income market participants to trade corporate bonds and other types of fixed-income instruments worldwide. It surpassed estimates in each of the last four quarters, with the average earnings surprise being 2.49%.

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