Limited (Ba1 stable) has sufficient headroom under its ratings to direct
surplus cash flows towards acquisitions over the next 12-18 months.
performances over the last five years, and its relatively small size, we
expect the company to expand through acquisitions in the IT sector,
before the expiry in
President and Senior Credit Officer.
"The company will need to grow to maintain its competitive position. In
fact, its ratings are one notch below investment grade, due in part to
the scale of its operations," adds Greene, who is also Moody's Lead
"If suitable acquisitions cannot be found in the next 12-18 months to
drive revenue and earnings growth, shareholders will likely seek one off
or potentially regular distributions, to avoid a build-up of cash and an
inefficient capital structure."
Moody's analysis is contained in its just-released report titled
Distributions," and is co-authored by Greene and
Moody's report says that because
in 2014 by 4%-6%, but with softer margins leading to a reduction in cash
from operations by 10%-13%, Moody's believes
for acquisitions rather than for shareholder distributions.
Moody's report also says
offering through acquisitions, as this segment is faster growing and more
profitable than its business process outsourcing (BPO) operations.
While its debt totaled some
maturities until 2019, and no drawdowns on its
credit facility, thereby leaving it with ample liquidity.
Moody's report says sensitivity analyses were conducted on
ability to sustain cash outflows using three different acquisition and
dividend scenarios, and only in the most aggressive of scenarios (an
acquisition of more than
net income) did
According to Moody's report,
investment grade, if it clarifies its policy on long-term shareholder
distributions and acquisitions.
primarily in the banking, financial services and insurance,
manufacturing, technology and healthcare sectors -- with a wide range of
business process management services and solutions.
The company has some 58,500 employees worldwide, the bulk of whom are
It is a leading player in the business process outsourcing industry, and
is extending its presence in other areas such as analytics and IT
Listed on the New York Exchange since 2007,
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