Moody's: Fundtech loan B1

Moody's Investors Service said it assigned a B2 rating to US FT Holdco, Inc.'s (Fundtech) corporate family rating and probability of default rating and a B1 rating to the proposed $225 million senior secured credit facilities.

The outlook is stable.

Moody's said the B2 corporate family rating reflects Fundtech's high initial pro-forma debt to EBITDA of about 5.5x, as well as Fundtech's relatively small scale in an increasingly competitive market segment.

The agency said it expects relatively weak financial performance over the coming year as merger integration costs reduce free cash flow, leaving only modest amounts of free cash flow after the integration. This limits options for debt reduction.

Moody's said it also noted Fundtech's dependence on its bank customers' IT budgets and the competitive threat posed by the merger of ACI Worldwide and S1 Corp. Nonetheless, about 60% of Fundtech's revenue base is recurring from hosting and maintenance services, which adds some stability to Fundtech's revenue.

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