S&P Global Ratings upgrades Nexi SpA credit rating to ’BBB-’

Investing.com -- S&P Global Ratings has raised its long-term issuer credit rating for Italy-based Nexi (BIT:NEXII) SpA to ’BBB-’ from ’BB+’, citing the company’s positive deleveraging trajectory and stable outlook. The upgrade was announced on March 24, 2025.

The credit rating agency expects Nexi to continue its deleveraging path over the next few years, supported by positive revenue prospects and solid cash generation. The company’s more conservative acquisition strategy, compared to its past debt-funded deals, is also anticipated to reduce cash outflows.

Nexi’s financial leverage is projected to fall below 3.0x in 2025, down from the estimated 3.1x at the end of 2024. The company’s 2024 year-end results confirmed growth in revenue and EBITDA, in line with expectations. Nexi’s revenues are forecasted to rise by 3%-5% for 2025 and 2026, with operating costs remaining under control and EBITDA increasing by 8%-9%.

The company’s leading market position in Italy and the Nordics, which accounted for 76% of its revenue in 2024, along with a large portion of recurring revenue (36%) and revenue diversification into the whole payment value chain, are seen as beneficial for the company’s revenue stability.

S&P Global Ratings also noted the continued decline in Nexi’s integration costs related to past acquisitions, which is positive for the company’s EBITDA trajectory. These costs are not treated as nonrecurring and are projected to continue to gradually decline 10%-12% in 2025-2026.

Nexi’s management has shown a strong commitment to deleveraging, further supporting the expectation of decreasing financial leverage. The capital allocation policy for 2025 prioritizes debt leverage reduction and shareholder remuneration, while being selective on acquisitions.

The company’s cash outflow related to acquisitions in 2025 and 2026 is expected to be limited. The sale of noncore assets is projected to generate about €40 million cash in 2025 and a further €100 million cash in 2026.

The company is also expected to continue distributing a significant portion of its generated excess cash to shareholders. After completing a €500 million share buyback in 2024, Nexi is projected to complete the €600 million announced shareholders remuneration in 2025, split into a €300 million share buyback and €300 million in cash dividends.

Nexi’s near-term refinancing needs are viewed as manageable, with a track record of proactively managing its debt maturities and a demonstrated capacity to access funding markets amid various financial conditions. After repaying €756 million debt in 2024, the company is expected to use excess cash to repay €507 million of debt maturing by the end of 2025.

Despite Nexi’s funds from operations (FFO)-to-debt ratio not likely to exceed the 30% threshold over the outlook horizon, the company’s clear deleveraging trajectory supports an investment-grade rating. Nexi’s free operating cash flow (FOCF) in 2025 and 2026 is expected to remain solid, in line with that of ’BBB-’ rated peers.

The stable outlook is based on expectations that in 2025-2026 revenue will grow by 3%-5%, operating costs will stay under control, integration costs will continue to decline gradually, and EBITDA will increase by 8%-9%. Cash outflows related to acquisitions in 2025 and 2026 are also expected to be limited.

The rating could be lowered if Nexi’s adjusted debt to EBITDA does not decline below 3x over the outlook horizon. This could be due to larger than expected acquisitions, unforeseen material share buybacks or dividend distributions, or weaker-than-expected profit margins. On the other hand, an upgrade could occur if Nexi’s financial leverage consistently falls below 2x while its FOCF remains solid, although this is seen as unlikely over the next two years.

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