S&P Global Ratings upgrades Nasdaq to ’BBB+’ on lower leverage

Investing.com -- S&P Global Ratings has upgraded Nasdaq Inc. (NASDAQ:NDAQ) to ’BBB+’ from ’BBB’ with a stable outlook, citing faster-than-expected reduction in leverage following the company’s 2023 Adenza acquisition.

The rating agency noted that despite taking on significant debt for the Adenza purchase, Nasdaq managed to lower its net leverage by limiting share buybacks more than anticipated and prioritizing debt repayment. This deleveraging was supported by strong performance, resulting in EBITDA growth, cash generation, and early debt repayments.

Market volatility in 2025 has boosted trading activity, helping Nasdaq’s financial metrics. For the second quarter, the company reported record U.S. cash equities volumes. EBITDA for the first half of 2025 increased 23% compared to the same period last year.

As of June 30, Nasdaq’s S&P Global Ratings-adjusted debt to EBITDA stood at 3.1x and funds from operations (FFO) to debt was 24.9% on an annualized basis.

S&P now expects Nasdaq’s adjusted debt to EBITDA to remain well below 3.5x during its forecast period, even considering potential declines in trading volumes or possible debt-funded acquisitions. The agency forecasts adjusted debt to EBITDA of approximately 3.0x and FFO to debt exceeding 25% by year-end 2025, with further improvements expected in 2026.

Revenue minus transaction-based expenses has grown 12% year-to-date compared to the same period in 2024, led by 21% growth in net market services revenue. The rating agency highlighted Nasdaq’s strong position in trading and listing of cash equities in the U.S. and Nordics, as well as its trading of equity options and index options in the U.S.

Financial technology revenue from the Adenza acquisition has further strengthened Nasdaq’s business profile, representing 35% of revenue minus transaction-based expenses for the six months ended June 30, 2025. S&P views this acquisition as consistent with Nasdaq’s strategy of expanding into higher-growth data and analytics businesses.

S&P expects Nasdaq’s liquidity to remain robust. Apart from $500 million in senior unsecured notes maturing in 2026, the company has no other debt maturities before 2028. The company maintains a $1.25 billion revolving credit facility available until 2027.

The stable outlook reflects S&P’s expectation that Nasdaq will maintain current EBITDA margins and keep adjusted debt to EBITDA below 3.5x, with no significant acquisitions anticipated in the next two years.

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