In an effort to restructure its debt, NYSE Euronext (NYX) recently declared that it has arranged a new senior unsecured credit facility worth $1 billion with a maturity period of three years. The current credit facility will allow the company's fund its general corporate activities till June 15, 2015. This new credit facility comes as a replacement of its existing $1.2 billion credit facility that is scheduled to mature on July 31, 2012. The new credit facility ensures uninterrupted and sufficient funding for the company.
Some of the top banks have joined hands to arrange this credit facility for NYSE. Citigroup Global Markets Inc. C), J.P. Morgan Securities LLC (JPM), Merrill Lynch, Pierce, Fenner & Smith Incorporated and Bank of China have agreed to be the joint lead arrangers and book runners for the financing.
NYSE Euronext has been making constant efforts to reduce its debt obligation since the last year and we expect its debt management strategy to empower it with fair liquidity for long-term growth opportunities.
Presently, NYSE maintains a financial leverage of 26.06%, which is almost three times more than that of its closest competitor CME Group Inc. (CME). The company's long-term debt stands at $2.07 billion as on March 31, 2012, reducing by almost 4% from the year-ago quarter.
Being more prone to debt financing, the company's net margin stands at 14.88% compared with 57.65% for CME Group. This is not a favorable situation as higher net margin indicates a better profitability scenario that helps in boosting investors' confidence.
NYSE currently retains a Zacks #3 Rank, which translate into a short-term Hold rating.
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