Fitch rates Newfold B, loans BB-, notes CCC+

Fitch Ratings said it assigned a first-time long-term issuer default rating of B to Newfold Digital Holdings Group, Inc., Newfold Digital, Inc., and Web.com Group, Inc. (collectively Newfold Digital). The outlook is stable. The agency also assigned BB-/RR2 rating to the $275 million and $105 million first-lien secured revolving credit facilities and the $2.675 billion first-lien term loan and CCC+/RR6 rating to the $685 million unsecured notes. Newfold Digital Holdings is the issuer.

“The ratings are supported by Newfold Digital's portfolio of web presence software tools and services primarily targeting the SMB market segment. The company benefits from the highly recurring revenue base typical of subscription software companies.

“However, SMB market exposure results in higher than average sensitivity to economic cycles as reflected by gross retention rates that are lower than typical enterprise software companies. Newfold Digital's private equity ownership structure is likely to maintain some leverage as it optimizes ROE by investing in growth over early debt repayment,” Fitch said in a press release.

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