23 March 2016 – Business Wire
Global Switch, the leading owner and operator of large scale, multi tenanted carrier and cloud neutral data centres in Europe and Asia-Pacific, has had its long-term issuer credit ratings re-affirmed by Fitch Ratings, Moody’s and Standard & Poor’s. The rating outlooks remain stable.
“We expect a steady increase in demand for data centre services driven by the continued demand from IT infrastructure and cloud sectors and by the overall increase in IP traffic.” Following these rating agency opinions, Global Switch retains its position as the highest credit rated data centre company in the world. Only one other major provider has achieved an investment grade rating.
These rating agency opinions are a testament to the Company’s consistent track record of delivery and its high quality portfolio of multi-tenanted, carrier and cloud neutral data centres operating in seven global financial and business centres.
Fitch Ratings affirmed its long-term issuer default rating at BBB+, noting that cash flow continues to be resilient, driven by a geographically diversified portfolio; the company has a high and stable occupancy rate of around 90%; and that Global Switch’s net debt/EBITDA of 3.2x for the financial year ended March 2015 and loan-to-value of 20% compare favourably with Fitch-investment grade rated real estate peers. Consistent with Moody’s and Standard & Poor’s, Fitch Ratings stated “We believe rental income should benefit from structural growth in the medium term, largely correlated to global internet traffic, bandwidth requirements, outsourcing trend and cloud computing.”
In retaining Global Switch’s Baa2 rating, Moody’s recognised its solid recurring income generated from long term leases; its high occupancy rates that are typically close to 90%; and its low rate of customer churn – achieving a long-run average of less than 2% per annum. Moody’s also observed that the growth in demand exceeds the growth in supply, particularly for the type of customers that Global Switch serves who require carrier-neutral data centres that provide low-latency connectivity and highly reliable service levels. Recognising Global Switch’s robust liquidity profile, Moody’s has raised its net debt/EBITDA guidance from 3.75x to 4.0x.
Standard & Poor’s retained its BBB rating citing Global Switch’s leading positions in most of the prime data centre markets in Europe and Asia-Pacific; its strong business model built around the development and renting of high-quality large-scale data centres; and its stable and predictable revenue generation through long average lease duration, best-in-class occupancy rates, and low churn rates. Standard & Poor’s also noted “We expect a steady increase in demand for data centre services driven by the continued demand from IT infrastructure and cloud sectors and by the overall increase in IP traffic.” Standard & Poor’s further noted Global Switch’s strengthening positions in its core markets and maintenance of a cautious development strategy, and raised its guidance on debt-to-(debt + equity) from 35% to 40%.
John Corcoran, Executive Chairman and CEO, Global Switch, said: “Following these credit ratings affirmations, Global Switch continues to be the highest credit rated data centre company in the world. The ratings recognise the continued resilience of Global Switch, its growing and predictable earnings profile and conservative development strategy. It is testament to the strength of our balance sheet and diversified portfolio of assets and further enhances our competitive advantage. This will enable us to access the deepest and most consistently available pools of liquidity to increase our financial flexibility and to reduce our cost of capital further.”