DISTRESSED DAILY: Rising Rates Cloud Finastra’s Financial Future

Financial software company Finastra Ltd.’s capital structure looks unsustainable thanks to its high leverage, weak cash flow and debt due in 2023 and 2024, according to S&P Global Ratings.

The London-based company underperformed the credit grader’s free cash flow expectations in the fiscal 2022 year, burning money from financial lease payments. Finastra faced higher upfront costs as it transitioned its customers to a new subscription-based model, which should help smooth future cash flows, though the company faces stress from higher interest expenses and taxes next year, S&P analysts Daniel Pianki and Nishit Madlani wrote.

Finastra pays 350 basis points ...