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Fidelity (FIS) Ups Borrowing Capacity of Credit Facility

Zacks Equity Research

Fidelity National Information Services FIS has completed modification of the existing Revolving Credit Facility, which raised its capacity to borrow from $4.0 billion to $5.5 billion, with expiration on Sep 21, 2023.

Further, Fidelity raised the capacity under its existing U.S. Commercial Paper (USCP) program to $5.5 billion from $4 billion. Also, the company adopted a new European Commercial Paper (ECP) program.

Through the ECP program, Fidelity may issue, on a private placement basis, senior unsecured commercial paper notes of up to $4.7 billion maximum aggregate amount outstanding at any time. Also, it may issue notes from time to time, with maturities that vary, but do not exceed 183 days from the date of issue.

The company intends to use about $2.9 billion in borrowings under the ECP and USCP programs and the proceeds from its recently completed $8.2 billion multi-currency bond offering, to finance the cash portion of the consideration for its pending merger with Worldpay. The expenses to be financed include outstanding Worldpay debt and other costs and expenses of the merger.

As a result of recent bond offering and new ECP program, the company expects weighted average interest rate on the permanent financing of the $11.1 billion used for the Worldpay deal to be nearly 1.5%.

Notably, JPMorgan’s JPM banking subsidiary, JPMorgan Chase Bank, N.A., acts as administrative agent under the revolving credit facility.

The payments industry has been booming of late, also Fidelity’s attractive core business, with a recurring revenue model and investment in digital products, keeps it well positioned for growth. However, stiff competition is a key headwind.

The company's shares have gained 10.3% over the past six months compared with 15.2% growth recorded by the industry.

Fidelity National currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

A couple of better-ranked stocks in the same space are Cardtronics PLC CATM and QIWI PLC QIWI. Both these stocks currently carry a Zacks Rank #1.

Cardtronics’ estimates for 2019 have been revised 4.5% upward over the past 30 days. Its shares have gained more than 2% over the past six months.

In the past 30 days, QIWI has witnessed upward estimate revisions of 12.2% for earnings for the current year. The stock has jumped around 11.4% in the past six months.

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