Fitch Ratings has shifted its outlook on IG Group Holdings PLC and IG Markets Limited to Negative from Stable while keeping their Long-Term Issuer Default Ratings at 'BBB'. The ratings agency also confirmed the company's GBP1 billion euro medium-term note programme and the GBP550 million of senior unsecured notes issued under that programme at 'BBB'.
The move to a Negative Outlook reflects Fitch's concern that IG Group's medium-term leverage could remain above the agency's negative rating sensitivity after the company announced on July 30, 2026 a proposed, partly debt-funded acquisition of Underdog Sports Holdings, Inc. Fitch projects that IG's gross debt/EBITDA ratio will rise from 0.9x at end-June 2026 and may stay at or above the downgrade threshold of 1.5x beyond end-2027.
The Underdog transaction is priced at USD1.1 billion in upfront consideration, with total potential consideration rising to as much as USD1.3 billion if earn-outs are realised. The deal is expected to close in late 2026 or early 2027.
On capital and liquidity, IG Group reported regulatory capital resources of GBP779 million at the end of the first half of 2026, versus a minimum regulatory requirement of GBP328 million. Management has set a target range for capital resources of 160% to 200% of the minimum requirement. The company also suspended its share buyback programme when it announced the Underdog acquisition. Available liquidity at end-1H26 was GBP0.7 billion, a cushion that Fitch noted could be drawn down if IG deploys available cash to help fund the acquisition.
Despite the leverage concerns, Fitch's affirmation at 'BBB' reflects the agency's view of IG Group's solid market position in over-the-counter leveraged trading, an improving revenue mix and resilient performance in core operations. The composition of revenue has shifted since FY19: OTC revenue represented 64% of total gross revenue in 1H26, down from 92% in FY19. That decline reflects growth in exchange-traded derivatives, stock trading and investments, and interest income on client money.
Fitch calculated IG Group's EBITDA margin at around 46% in 1H26, down from 52% in FY25, with the reduction attributed mainly to higher operating expenses.
Fitch also set out the rating sensitivities linked to the Outlook. A downgrade to 'BBB-' could follow if IG Group does not succeed in reducing gross debt/EBITDA sustainably below 1.5x over the rating horizon. Conversely, the Outlook could be restored to Stable if the company demonstrates a clear and sustainable path to lowering gross debt/EBITDA below 1.5x during the Outlook period, supported by EBITDA growth in line with or ahead of Fitch's expectations after completing the Underdog acquisition.