Global Switch re-affirmed as the highest credit rated data centre company in the world
March 23, 2016
Global Switch, the leading owner and operator of large scale,
multi tenanted carrier and cloud neutral data centres in Europe and
Asia-Pacific, has had its long-term issuer credit ratings
re-affirmed by Fitch Ratings, Moody's and Standard & Poor's.
The rating outlooks remain stable.
Following these rating agency opinions, Global Switch retains
its position as the highest credit rated data centre company in the
world. Only one other major provider has achieved an investment
These rating agency opinions are a testament to the Company's
consistent track record of delivery and its high quality portfolio
of multi-tenanted, carrier and cloud neutral data centres operating
in seven global financial and business centres.
Fitch Ratings affirmed its long-term issuer
default rating at BBB+, noting that cash flow continues to be
resilient, driven by a geographically diversified portfolio; the
company has a high and stable occupancy rate of around 90%; and
that Global Switch's net debt/EBITDA of 3.2x for the financial year
ended March 2015 and loan-to-value of 20% compare favourably with
Fitch-investment grade rated real estate peers. Consistent with
Moody's and Standard & Poor's, Fitch Ratings stated "We believe
rental income should benefit from structural growth in the medium
term, largely correlated to global internet traffic, bandwidth
requirements, outsourcing trend and cloud computing."
In retaining Global Switch's Baa2 rating,
Moody's recognised its solid recurring income
generated from long term leases; its high occupancy rates that are
typically close to 90%; and its low rate of customer churn -
achieving a long-run average of less than 2% per annum. Moody's
also observed that the growth in demand exceeds the growth in
supply, particularly for the type of customers that Global Switch
serves who require carrier-neutral data centres that provide
low-latency connectivity and highly reliable service levels.
Recognising Global Switch's robust liquidity profile, Moody's has
raised its net debt/EBITDA guidance from 3.75x to 4.0x.
Standard & Poor's retained its BBB rating
citing Global Switch's leading positions in most of the prime data
centre markets in Europe and Asia-Pacific; its strong business
model built around the development and renting of high-quality
large-scale data centres; and its stable and predictable revenue
generation through long average lease duration, best-in-class
occupancy rates, and low churn rates. Standard & Poor's also
noted "We expect a steady increase in demand for data centre
services driven by the continued demand from IT infrastructure and
cloud sectors and by the overall increase in IP traffic." Standard
& Poor's further noted Global Switch's strengthening positions
in its core markets and maintenance of a cautious development
strategy, and raised its guidance on debt-to-(debt + equity) from
35% to 40%.
John Corcoran, Executive Chairman and CEO, Global Switch, said:
"Following these credit ratings affirmations, Global Switch
continues to be the highest credit rated data centre company in the
world. The ratings recognise the continued resilience of Global
Switch, its growing and predictable earnings profile and
conservative development strategy. It is testament to the strength
of our balance sheet and diversified portfolio of assets and
further enhances our competitive advantage. This will enable us to
access the deepest and most consistently available pools of
liquidity to increase our financial flexibility and to reduce our
cost of capital further."
Additional information regarding Global Switch's ratings can be
found in press releases accessible from the rating agency websites
at: www.fitchratings.com, www.moodys.com and
Global Switch is a Reuben Brothers company.
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