Fitch Cuts IG Group Outlook to Negative on Debt from Underdog Acquisition

Fitch Ratings has revised its outlook for IG Group Holdings PLC to Negative from Stable, signaling a potential downgrade due to increased leverage from its proposed acquisition of Underdog Sports Holdings. The ratings agency affirmed the online trading provider's Long-Term Issuer Default Rating (IDR) at 'BBB'.

Acquisition Drives Leverage Concerns

The outlook change stems from IG Group's plan to acquire Underdog Sports in a deal valued at $1.1 billion upfront, with a total potential consideration of up to $1.3 billion. Fitch stated the partly debt-funded transaction, expected to close in late 2026 or early 2027, poses a risk to the company's credit profile.

The agency projects IG Group's gross debt-to-EBITDA ratio will rise significantly from 0.9x at the end of June 2026. Fitch expressed concern that this key leverage metric could remain at or above its negative rating sensitivity of 1.5x beyond the end of 2027. In conjunction with the acquisition announcement, IG Group suspended its share buyback program.

Rating Affirmation and Financial Health

Despite the negative outlook, Fitch affirmed the 'BBB' rating, reflecting IG Group's strong market position in over-the-counter leveraged trading and its improving revenue diversification. The source noted that revenue from OTC products fell to 64% of total gross revenue in the first half of 2026, down from 92% in fiscal year 2019, as other segments grew.

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Key financial points supporting the current rating include:

• Regulatory Capital: Stood at £779 million against a £328 million minimum requirement at the end of the first half of 2026.
• Available Liquidity: Reported at £0.7 billion, though Fitch noted this buffer could shrink if used to fund the acquisition.
• Profitability: The firm's Fitch-calculated EBITDA margin declined to approximately 46% in 1H26 from 52% in FY25, primarily due to higher operating expenses.

Path to Downgrade or Stability

Fitch outlined clear triggers for future rating actions. A downgrade to 'BBB-' could occur if IG Group fails to bring its gross debt-to-EBITDA ratio sustainably below the 1.5x threshold over the rating horizon.

Conversely, the outlook could be revised back to Stable if the company demonstrates a clear path to deleveraging. This would need to be supported by EBITDA growth that meets or exceeds expectations following the integration of Underdog Sports.