KUALA LUMPUR (Oct 11): Business services data and analytics (BSDA) companies generally were resilient to the coronavirus pandemic, according to a new report from Fitch Ratings.

In a statement on its website last Friday, Fitch said its rated universe benefited in most cases given high proportions of subscription revenue and being less correlated to declining business volumes, tight integration with client workflows and very strong margin profiles.

Furthermore, it said cyclical end markets disproportionately affected have rebounded, and increased reliance on data analytics was a continued tailwind.

As a result, it said BSDA issuers returned to mid-single-digit growth, on average, in 2021.

The rating agency said it expects growth to be sustained into 2022, assuming continued normalization in cyclical end markets and no imposition of additional containment measures.

Fitch continues to see the potential for issuers to maintain structurally higher operating EBITDA margins of 1-2 percentage points higher on average.

However, Fitch said it continues to see risk of data and analytics issuers increasing acquisition spend, adding that Fitch universe acquisitions totalled approximately US$90 billion in 2020, inclusive of the announced US$44 billion S&P Global Inc. (A-/Stable) and IHS Markit Ltd. (BBB/Rating Watch Positive) merger, which is expected to close in 4Q21 or 1Q22.

“While there have not been blockbuster deals in 2021, data analytics providers continue to be active acquirers in capabilities.

“While issuers have ample FCF generation to fund bolt-on acquisitions and pay down acquisition debt, issuers have also prioritized increased shareholder return and are maintaining higher leverage overall,”it said.