Block’s $1.5 billion notes offering receives ratings from S&P and Fitch

Investing.com -- Block Inc. is issuing $1.5 billion in senior unsecured notes, with S&P Global Ratings assigning a ’BB+’ rating and Fitch Ratings giving a ’BBB-’ rating to the offering.

The debt issuance consists of $750 million in notes due 2030 and $750 million due 2033, according to S&P Global’s Wednesday announcement. Block plans to use the proceeds for general corporate purposes, which may include debt repayment, acquisitions, capital expenditures, and working capital.

S&P noted that while the transaction enhances Block’s on-balance-sheet liquidity, it will increase the company’s gross leverage to around 3.0x debt to adjusted EBITDA. The agency expects Block to maintain adjusted net debt to EBITDA at 1.5x-2.0x on a weighted average basis.

The new debt is being issued at significantly higher rates than Block’s previous unsecured issuances, which could reduce EBITDA interest coverage to 6x-10x from 13x for the twelve months ended June 30, 2025, according to S&P.

As of June 30, Block had approximately $6.4 billion in unrestricted cash and $510 million in investments in debt securities. S&P expects Block’s liquidity to increase to $7.9 billion following the transaction.

Fitch, which maintains a ’BBB-’ long-term issuer default rating on Block with a Positive outlook, highlighted the company’s improved leverage position. EBITDA leverage improved to 1.8x as of June 2025, down from 5.0x-6.0x in 2021-2022, though it’s projected to reach mid-2.0x pro forma for the new debt issuance.

Fitch noted that Block is well-positioned to capitalize on secular growth in payments and consumer financial services, with gross profits that could exceed $10 billion in 2025 compared to $370 million in 2015.

The ratings agency pointed to Block’s focus on achieving the ’Rule of 40’ in 2026, a profitability metric combining growth and adjusted operating margins. Block expects to achieve this through mid-teens gross profit growth and mid-20% operating margins.

Fitch also highlighted Block’s strong financial flexibility, with $6.8 billion in cash and short-term investments as of June 2025 and an untapped $775 million revolver.

Both agencies identified potential risks, with S&P noting it could lower ratings if Block pursues a large cash- or debt-financed acquisition or if operating performance deteriorates. Fitch cited founder and CEO Jack Dorsey’s 41% voting power as a significant rating factor to consider.

This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.