S&P raises SUSE

S&P said it raised SUSE SA’s ratings to BB- from B+ and kept the loan’s recovery rating at 3 but revised recovery expectations to 65% from 60%. SUSE is the parent of SUSE Linux.

“The upgrade is supported by SUSE Linux's sound deleveraging since the partial debt repayment, strong cash flow ratio, a more prudent financial policy, and strong growth prospects. Shortly after the IPO in May, SUSE Linux fully repaid its $270 million second-lien term loan and part of the first-lien term loan,” S&P said in a press release.

“We think the debt reduction will result in a sound deleveraging toward 5x in 2021 and stronger cash flow metrics because of interest savings. We forecast that SUSE Linux will generate more than $150 million FOCF in 2021, with FOCF to debt approaching 20%, better than the average of other similarly rated software peers,” the agency said.

The outlook is stable.

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