OREANDA-NEWS. Fitch Ratings has affirmed the Long-Term Issuer Default Rating (IDR) and senior unsecured ratings on The Dun & Bradstreet Corporation (NYSE:DNB; D&B) at 'BBB' and Short-term IDR and commercial paper (CP) program at 'F2'. The Rating Outlook is Negative. The ratings affect $1.8 billion of total funded debt. A complete list of rating actions follows at the end of this release.

The ratings affirmation is supported by D&B's defensible leadership position in commercial credit data & analytics, tangible progress in its turnaround and demonstrated commitment to reduce leverage (total debt to operating EBITDA) below its stated target (and Fitch's downgrade sensitivity) of 3.0x. The Negative Rating Outlook reflects the risk and timeline involved in D&B's deleveraging trajectory (Fitch does not expect leverage near 3.0x until at least the end of 2017). Indications that D&B is veering from this deleveraging path due to underperformance, shareholder remuneration above Fitch's expectations, or other reasons, will likely result in a downgrade.

KEY RATING DRIVERS
Defensible Market Leadership: D&B's database of over 250 million records of proprietary trade credit and corporate family data provides a hard-to-replicate asset underpinning its core product offerings. Commercial credit data generally does not go stale, but rather appreciates in value over time as the accumulation of past defaults and payment patterns provides a larger sample from which to draw to produce analytical insights. Proprietary, accurate data has made D&B the gold standard in commercial credit, and is its foundation for new revenue streams.

Tangible Progress on Turnaround: Fitch views accelerating bookings growth as an indicator of successful execution since new management implemented its strategy in 2014. While short-term disruption in Trade Credit is to be expected as the company migrates DNBi to the cloud, Fitch's rating case assumes that revenue growth in Other Enterprise Risk Management and Advanced Marketing Solutions offsets that pressure, and drives low to mid-single digit total organic revenue growth and stable operating margins.

DaaS Opportunity: Although nascent, Fitch believes D&B's data-as-a-service business can be critical in returning the company to sustainable organic growth and eventually achieving margin expansion. Fitch believes that partnerships with SalesForce, Oracle, Adobe and other leading software companies position D&B to capitalize on the competitive intensity of the software industry with minimal investment. These partnerships illustrate the value of owning proprietary data assets, for which the number of derivative monetization opportunities is limited only by the creativity and execution ability of the management team.

Deleveraging Trajectory: On April 28, 2015, following D&B's re-acquisition of Dun & Bradstreet Credibility Corp (DBCC), Fitch revised the Rating Outlook to Negative based on the resulting increase in leverage, and the risk that D&B would not delever below Fitch's 3.0x sensitivity within a reasonable timeframe. At 3.9x leverage as of Dec. 31, 2015, Fitch does not expect D&B to approach 3.0x until at least the end of 2017, as modest EBITDA growth, a small domestic cash balance and re-investment in growth will cause a slow and gradual deleveraging pace. While the expected timeframe to reduce leverage back below Fitch's rating sensitivity is longer than what Fitch would typically consider temporary, the agency believes D&B's stated commitment, zero share repurchases in 2015 and accelerating bookings growth establish credibility to affirm the IDR until the company veers from its current trajectory.

Capital Allocation: D&B currently has a $100 million share repurchase program in place that can be used to offset the dilutive effect of shares issued under the company's stock incentive plans and employee stock purchases. Fitch's rating case assumes de minimis share buyback activity until leverage is below 3.0x, and allows for modest dividend increases consistent with historical trends. Shareholder remuneration above Fitch's expectations or acquisitions that further delay deleveraging will likely result in a downgrade.

KEY ASSUMPTIONS
Fitch's key assumptions within Fitch's rating case for the issuer include:

--Revenue growth: mid- to high-single digit total revenue growth in 2016 (low-single digit organic plus inorganic from DBCC), low- to mid-single digits thereafter;
--EBITDA margin remains in the high 20's over the rating horizon; incremental margin is reinvested in executing on the company's growth plan;
--Dividend growth of 4% - 5% per year;
--Share buybacks limited to offsetting dilution;
--Total leverage approaches 3.0x by the end of 2017 (is below 3.0x when adding change in deferred revenue to EBITDA);
--FCF margins in the low- to mid-teens;
--Potential financial penalty related to the Shanghai Roadway investigation does not materially impact credit protection measures or liquidity profile (Fitch's review of the top 20 worldwide government-imposed data privacy fines from 1999-2014 show a mean and median of $8.6 million and $5.0 million, respectively, and a range of $1.8 million to $32.5 million).

RATING SENSITIVITIES
Upgrade Unlikely: Given the Negative Rating Outlook, Fitch does not expect a positive rating action during the rating horizon. The Outlook could stabilize as D&B demonstrates progress in reducing leverage to 3.0x.

Negative Rating Action: The ratings could be downgraded if D&B veers from its current deleveraging trajectory, potentially due to larger than expected declines in Trade Credit as the company migrates DNBi to D&B Credit, failure to sustain momentum in partnerships, a change in financial policy with regard to leverage or shareholder remuneration, or other reasons. Acquisitions that delay deleveraging may also result in a downgrade. Additional potential risks to the rating include any material changes in data privacy laws or regulations that adversely impact D&B's ability to monetize its data, or a material financial penalty related to the Shanghai Roadway operations investigation, which remains ongoing.

LIQUIDITY
Liquidity as of Dec. 31, 2015 was ample, based on Fitch's expectations for $200 - $300 million of annual FCF, $618 million available under the company's unsecured $1 billion revolving credit facility, and an $800 million commercial paper program (borrowings reduce revolver availability). Of the company's $365.7 million of cash and cash equivalents as of Dec. 31, 2015, $354.1 million was held outside of the U.S. Near-term maturities include $450 million of unsecured notes due in 2017, which Fitch assumes the company will refinance.

Total unadjusted funded debt as of Dec. 31, 2015 was approximately $1.8 billion and primarily consisted of:

--$800 million CP program ($0 outstanding);
--$1,000 million senior unsecured revolving credit facility due 2019 ($382 million drawn);
--$395 million senior unsecured term loan due 2020;
--$450 million of 3.250% senior unsecured notes due 2017;
--$300 million of 4.375% senior unsecured notes due 2022;
--$300 million of 4.000% senior unsecured notes due 2020;

FULL LIST OF RATING ACTIONS

Fitch has affirmed The Dun and & Bradstreet Corporation's ratings as follows:

--Long-Term IDR at 'BBB';
--Short-Term IDR at 'F2';
--Commercial paper (CP) program at 'F2';
--Senior Unsecured Credit Facilities at 'BBB';
--Senior Unsecured Notes at 'BBB'