OREANDA-NEWS. Dun & Bradstreet's (DNB) 'BBB' Issuer Default Rating (IDR) is not affected by the company's announcement to move to a partnership model in the Australia/New Zealand (ANZ) market, in Fitch Ratings' view. Archer Capital, an Australian private equity firm, will acquire the entirety of DNB's ANZ business for AUD \$220 million via a newly-formed Credit Data Solutions business, which will continue to provide commercial solutions in the region as a partner within DNB's Worldwide Network. The agreement is subject to regulatory approvals. A full list of ratings follows at the end of this release.

Fitch believes that the net proceeds from the sale could improve leverage net of forgone EBITDA. Management is committed to an investment-grade rating and Fitch believes DNB will prioritize debt repayments in order to de-lever. Fitch estimates pro forma leverage to be at approximately 3.5x by the end of 2015 and leverage to approach 3x during year 2016. The Negative Outlook on the IDR reflects Fitch's expectation that the company's credit metrics will remain elevated and outside the thresholds for a 'BBB' rating for an extended period and reflects the risk associated with the turnaround in the small business channel.

Fitch continues to believe that DNB can successfully execute its investment strategy and improve its operating performance over the next two to three years. However, the agency notes there is limited capacity within the current ratings for operational missteps in light of the additional debt and de-levering delays back to Fitch's target leverage of 3x.

DNB has solid free cash flow (FCF) generation (\$193.5 million after dividends for the LTM ended March 2015), strong EBITDA margins (above 30%), and levers that provide DNB with the ability to pay down debt.
The sale of the ANZ business includes both the consumer (consumer risk and debt collection) and commercial (risk management and sales & marketing) solutions. Approximately two-third of the ANZ business is consumer related and is inconsistent with DNB's business-to-business focus.

KEY ASSUMPTIONS

Fitch's key assumptions within the rating case include:

--Mid-single-digit revenue growth in 2015 (includes growth from acquisition) and then improving growth in the low-single-digit range.
--Margin pressures in near term due to investment initiatives as well as lower margins from acquired operations.
--Fitch expects pressure on DNBi to persist, offset by growth in Other Enterprise Risk Management (subgroup of RMS) and the Sales and Marketing Solutions segment.
--Modeled share-buyback activities to address dilution in the short term with prioritization for de-levering.
--Maturing \$300 million in senior notes due 2015 expected to be refinanced.

RATING SENSITIVITIES

Given the Negative Outlook, Fitch does not expect a positive rating action during the rating horizon. The Outlook could be stabilized as Dun & Bradstreet demonstrates progress in reducing leverage to 3x by the year-end 2016 along with traction in the company's turnaround of its RMS business (evidenced by improved revenue and EBITDA margin performance).

The ratings may be downgraded if Fitch believes leverage will be sustained above 3x and/or if the company is unable to demonstrate traction in its revenue turnaround. Also, a change in financial policy indicating more aggressive shareholder returns that would drive leverage beyond 3x would pressure the ratings.

Fitch currently rates DNB as follows:

--IDR at 'BBB';
--Short-term IDR at 'F2';
--Bank credit facility at 'BBB';
--Delayed-draw term loan at 'BBB'
--Senior unsecured notes at 'BBB';
--Commercial paper at 'F2'.

The Rating Outlook is Negative.