Good morning, ladies and gentlemen, welcome to the London Stock Exchange Group third quarter results. As a reminder, all participants are in listen-only mode, and the presentation is being recorded. Following the presentation, there will be a question and answer session where we will be taking questions from the conference call line. I will now hand over to your first speaker today, Paul Froud. Please go ahead.
Thank you. Good morning, everyone. Thank you very much for joining us here today. It's the normal format. On the call, we'll hear first of all from David Warren, the Group CFO, who will talk through our third quarter results. Then we will hear from David Schwimmer, the Group CEO, on recent corporate developments. Then after that, we will open up the lines for Q&A. With that, let me hand you over to David Warren.
Thank you, Paul, and good morning, everyone. Today we have announced our third quarter results, which show a resilient performance across the group against a challenging market backdrop. Total income for the quarter is up 2% to GBP 600 million, and for the year to date, we are up 6% at GBP 1.835 billion. Gross profit after cost of sales is up 4% in Q3 and up 7% for the first nine months of the year. Within these headlines, let's mention a few highlights. Information Services saw revenue grow by 1% to GBP 223 million and was up 4% on a constant currency basis, reflecting a weakening U.S. dollar in the period. Recurring subscription revenues at FTSE Russell saw good growth with 4% on a reported basis and 7% adjusted for FX.
The business continues to work closely with customers to build new indices, develop our data offering, and partner to create benchmark-linked products and derivatives based on our IP. Asset-based revenue was down 7% in the period, down 3% on a constant currency basis, reflecting the lower asset values for some passive funds in the previous quarter. Revenue was up from Q2 as the ETF market continued to recover from the start of the year. Real-time data showed growth driven by non-display licenses, while other information was broadly flat. Moving on to post-trade, total income grew 5% on a reported basis to GBP 259 million and was up 6% on constant currency for the quarter.
OTC Clearing revenues were 8% lower as we saw quiet summer months at SwapClear, with reduced demand for rates risk compared to the same period last year, when volatility in the bond markets led to elevated swap clearing activity. In contrast, we saw strong growth in non-OTC revenues up 11% across fixed income equities and derivatives. The performance at UnaVista, our post-trade reporting business, includes back billing revenue catch-ups. Growth would be broadly flat if we remove the one-offs seen in Q1 and Q3. As indicated at our interim results, collateral levels and returns were lower across the period compared to H1 and are expected to remain at lower levels for Q4. Therefore, we maintain our NTI guidance to be similar to H2 2019, assuming no change in market environment. Turning now to Capital Markets, revenue was flat at GBP 102 million.
The period saw a good number of further issues and a third listing through the Shanghai-London Stock Connect. Growth in primary markets was offset by a reduction in secondary markets, with lower equity trading activity as the market was subdued during the summer. Technology services saw a reduction of GBP 1 million- GBP 15 million for the quarter, but is flat on a year-to-date basis for gross profit. Finally, cost of sales saw a 16% reduction in the period as a result of a one-off benefit from SwapClear's revenue share agreement due to the high levels of income in the nine months to date. Last year, this occurred in Q4, and we expect that there will be a further small benefit in Q4 of this year. In summary, a resilient performance across the business in challenging markets. With that, let me turn it over to David Schwimmer.
Thanks, David. The Refinitiv transaction continues to progress well. We have received further merger clearances, including foreign investment clearance from the Italian government under Italy's Golden Power law. In the summer, we ran a competitive process which resulted in an agreement for the divestment of the entire Borsa Italiana group to Euronext for cash consideration of EUR 4.3 billion. We reached this agreement in the expectation that a divestment of the Borsa Italiana group or part of it would be a condition to any European Commission clearance for the Refinitiv transaction. We believe this will contribute significantly to addressing the EU's competition concerns. I should note the sale to Euronext remains conditional, amongst other things, on the completion of the Refinitiv acquisition.
We intend to use the proceeds to repay a portion of Refinitiv's debt, allowing us to return more quickly to our target leverage ratio of 1x- 2x net debt to EBITDA. On a standalone basis, the group has a strong financial position with over GBP 750 million of committed facility headroom available. LSEG's credit ratings from Moody's and S&P are unchanged at long-term A3 and A respectively. Following our announcement on the proposed sale of the Borsa Italiana Group, both ratings agencies have indicated this is credit positive. S&P have reduced their potential downgrade to a single notch. We are also moving further ahead with preparation for Refinitiv's integration with, among other things, organizational design well advanced, senior roles identified, culture, purpose, and strategy for the combined group developed, and plans for synergy achievement set out in detail.
We are drafting a prospectus which will contain more information. We expect to publish it before the end of the year. In summary, we are making good progress on the highly attractive Refinitiv transaction. We expect to close in the first quarter of 2021. Before we turn to questions, as this is his last set of results, I want to express on behalf of LSEG our thanks, and also my personal thanks to David Warren in recognition of his significant contribution to the transformation and success of the group over the past eight years.
As CFO, David has led on many acquisitions, overseeing the realization of resulting synergies and value creation, kept a tight control on costs, and contributed to the strategy and development of the group. He has done so with his characteristic professionalism, hard work, resilience, humanity, and good humor. He has been a terrific leader of LSEG and a good friend to many here. David, I am sure that all on this call wish you all the best with your next steps.
Thank you, David. Look, it really has been a great privilege to be a part of this company over the past eight years, and to just really have had the opportunity to contribute to what's been remarkable growth and some significant accomplishments, and to work closely with you and my other colleagues, a really talented and dynamic management team. I leave very excited about the future with Refinitiv and the tremendous opportunities ahead. For those on the call, I want to say thank you to you as well.
I really appreciate your continued support and interest, and the very valuable research we have had over the years from our analysts. I've enjoyed meeting you and speaking with many of you over the past eight years, so thank you. I know that I leave the role of Group CFO in the very capable hands of Anna Manz. Whom I know you'll have the chance to meet in due course. Thank you, and I'll turn it back to David.
Thank you, David. Let's move on to Q&A. Operator, could you please open the line for our first questions?
As a reminder, to ask a question, you will need to press star one on your telephone keypad, and to withdraw your question, press the pound key. Please stand by while we compile the Q&A roster. We have the line of Haley Tam for the first question from Credit Suisse. The line is now open.
Good morning, gentlemen. Thank you for taking my questions. Congratulations also to David for moving on. My questions seem very mundane after all of that. Two questions on Refinitiv, please, and one just on the post-trade business. With Refinitiv, given you think the Borsa Italiana deal should significantly contribute to addressing the Commission concerns and competition, is there any comment you can give on some of the other actions you might be able to take or propose to resolve some of the vertical concerns that were raised by the Commission?
The second question on just the debt refinancing, given the S&P is reducing your potential downgrade to just one notch versus two, is there anything you can say to us about how that might affect the potential refinancing cost expectations for the Refinitiv debt you will take on? The other question just on post-trade was just on the non-OTC revenues, which were a very good year-on-year growth driver. I just wondered if you could give us any idea how much of that does actually relate to your Italian operations, I think MTS, for example. Thank you.
I'll take your first question, and then David Warren can address your last two on the debt refinancing and post-trade. With respect to the Refinitiv transaction and the approval process, we continue to engage with the European Commission. I would say constructive engagement, ongoing dialogue, and not in a position to talk about anything specific with respect to any of the other issues that might have been raised as part of the review. We continue to make good progress and look forward to closing the transaction in the first quarter. David, you want to touch on the debt refinancing and the-
Post-trade? Yeah, sure.
Yeah.
Yes. Well, I appreciate your question on that. Look, I think that first thing I would say is all of the arrangements that we put in place with respect to the hedging, the bridge facilities still remain very much in place. What we can actually achieve on the refinancing will certainly depend on market conditions at the time we are able to finance or refinance. We expect to go in with a mix of bonds as well as term loans, and having the right mix between euros and U.S. dollar. I can't make any predictions, but I would just say generally that rates have remained low and are lower than where they were when we announced the transaction in August of last year, as you all will know, as you follow the market.
I think it's favorable, but it would be impossible at this point to pinpoint it any further than that. I think on your question of the non-OTC, it's clearly a mix of businesses, equities, fixed income, and derivatives. We don't break out separately the impact of the Italian businesses down to the asset class. But I think we have generally said that the impacts of Borsa on the future Comco projections and operations are minimal. I would focus people on the other asset classes which are continuing to perform strongly, such as equity clearing.
Okay. Thank you very much.
Thank you. Operator, next question please.
Your next question comes from the line of Philip Middleton from Bank of America.
Yeah, thank you. As one youngster to another, I'd like to again wish David all the best, and thank you for all his help over the years. I don't know what people are laughing for at that. Just a couple of questions. First of all, on the debt side, do you still feel 1x-2x is the right leverage for a company with the level of recurring revenues that you will have post-Refinitiv, given that your peer universe following the transaction can take much more leverage than that? Secondly, and this is much more minor, but coming back to what Borsa Italiana disposal means for your business. One of the synergies you've always talked about was between the corporate services sales of Refinitiv and the companies you list. Now, given that you'll be listing fewer companies in the course, are there any implications there? Thank you.
David, do you want to touch on the leverage, and then I'll take the synergies.
Yeah. Philip, thank you. We've had the question before, and it's certainly one that we have had under fairly constant review over the years. I think right now we feel like that is the right place to be, because I think what it does is it definitely imposes a good discipline on us to drive the benefits of the transaction to de-lever aggressively, and to get ourselves back down into target range.
It is certainly something that is continually under review, and I'm not going to make any predictions for the future. I wouldn't do that even if I was sticking around. I think right now we feel like it's the right place to be. We know that works well with the rating agencies. To the extent that we are able to de-lever quickly, get ourselves into with a very strong balance sheet, that definitely gives us good capacity for further growth.
Philip, with respect to your question around any implications on synergies, there's a very modest impact on both the cost side and the revenue side in terms of the Borsa Italiana business leaving the group, and having very modest impact on synergies. We do not feel it is a significant enough impact that it would require us to change any of our guidance around either the cost or the revenue synergies.
Okay, thank you. That's very helpful. Thanks very much.
Thank you.
Your next question, comes from the line of Andrew Coombs from Citi. Your line is now open.
Morning. It is Andrew from Citi. Just a couple of questions. Firstly, on the Borsa Italiana proceeds, can you just detail what your expectations are in terms of tax and fees on those proceeds, i.e., the net contribution, and therefore how much you expect to be able to pay down the debt? Second question will be on the net treasury income. Held up slightly better than expected. Can you just clarify, have all the base rate cuts now fed through, i.e., do you think this quarter is a fair base to extrapolate from? Thank you.
Yeah. Look, I think on the first question, and I appreciate the question. We're still working through those calculations. We don't typically disclose a lot of detail there, but when we're in a position to say more as the transaction moves forward, we will say more in terms of what we do expect to be the net number that would be available to us. It's still something that we're working through but aren't in a position to disclose at this point. I think on net treasury, we did signal at our interims that we expected to see collateral levels come down from the elevated levels they were at, and we also expected that the reinvestment yields would also come down as some of the investments that we made in the first half of the year in a higher rate environment continue to roll off.
That's still very much the trend. We can't predict exactly how that will happen. In certain areas, it's been a little bit better than what we had assessed at the half year. As I said in my prepared remarks, we still continue to feel good about our NTI guidance, that for the second half of this year will be similar to what we achieved in the second half of last year. That's what we would expect for the full year. The fourth quarter will be kind of a continuation of where we are now, but arriving at a total NTI for the second half of the year that's pretty much broadly flat to where we were last year in the second half.
Very clear. Thank you, and all the best, David.
Thank you.
Your next question comes from the line of Arnaud Giblat from Exane. Your line is now open.
Hi. Yeah, good morning. I've got a few questions, please. Firstly, if I can start with LCH. Clearly, I understand that the banks take a lower revenue share of LCH revenues as contribution increases there. I'm wondering if you could maybe give us a bit of a feel as to what is the marginal share from here, what marginal share of revenues do they take? That's my first question. Thanks for the clarification on NTI. We should be expecting quite a step down in Q4 NTI if we listen to your guidance. My third question is around Borsa Italiana. On the divestment of Borsa Italiana, Euronext have highlighted the possibility down the line to break the contract with LCH. I'm wondering if that's something that you factored in and what sort of synergies that could entail. Thank you.
Yeah. David, maybe I'll take the one on LCH cost of sales. I appreciate the question, Arnaud. These are, as we've said before, these agreements with the banks are confidential. We have not in the past, and certainly not going to be giving any more sort of precise information about the actual splits. I think the structure of this, the concept of this is that, as you alluded to in your question, and I think you understand this, that we do receive a greater share of the revenues and are receiving a greater share of the revenues in the third quarter, given the activity levels that we've achieved in the first nine months. When we hit those activity levels, we do get a greater share of the revenues.
You will see that without going into the specifics about the percentage of shares, obviously you see that benefit in the cost of sales line. You saw that in Q3. Last year it occurred in Q4, that change in sharing dynamics. It was in the Q4 cost of sales, but was really all part of the overall financial statements that we reported as part of the prelims. I really can't answer your question specifically, but I just can tell you that that concept is when we reach a certain level of activity, we are able to get a greater share of the revenues.
Morning, Arnaud. With respect to your question around the possibility of clearing and breaking the clearing contract. We do have a clearing relationship with Euronext, a constructive relationship, good working partnership. The existing contract runs through 2027. As Stéphane Boujnah has mentioned, to the extent that they would want to try to change some of the clearing and make use of CC&G for some asset classes that it doesn't currently clear, that would require some technology investment. That would require changes in capital requirements.
It would require some regulatory approvals. In addition to that, we do operate in an open access environment also with a lot of interoperability among the various clearing options. There is a customer behavior or a customer choice element to this as well. Given all of those factors, we don't see this as a near-term issue, and we look forward to working constructively with Euronext in the coming years.
David, if I can just follow up. When you acquired LCH, LME was able to launch their own clearing technology and shifted quite instantly, actually, all the clearing volume. Could this be the case with Euronext? Is it really up to the clients to decide where they're clearing on certain products?
It's a little bit different asset class by asset class, in terms of how some of the customer preferences will work. Also, there is a significant difference in that we have an existing contractual relationship. There are certain opportunities to terminate that contractual relationship with substantial notice periods, et cetera. This is not something that is going to be a quick change. Hope that helps.
Thank you.
Your next question comes from the line of Mike Werner from UBS. Your line is now open.
Thank you. Just a couple of questions. One just on the yield, the SETS yield. You reported, I think it was 0.76 basis points. That was the highest that we've seen, I think, in over 10 years. I was just wondering if you could provide a little color there, and if that's something we can expect going forward on a run rate perspective. Second, just I guess a quick clarification on the clearing relationship, particularly between MTS and LCH.
I was just wondering if there was anything contractual there, or again, this was just kind of more of a client preference, open access relationship. Finally, we've certainly seen revenue growth slow a little bit this year at LSEG versus some of the growth rates that we have seen in previous years. Just looking forward as to the 5%-7% guidance for revenue growth for the first three years of the combined LSEG Refinitiv entity. I just wanted to see if that's something that you're still very comfortable with. Thank you.
Yeah. Maybe, David, I'll start. I mean, on the SETS yield, I don't have the answer to hand. Perhaps Paul does, or we can just come back to you with it. Paul, what would be the proposal there?
Okay, thanks.
Okay. I think Paul may be muted. Why don't we just come back to you on that one, okay? I appreciate the question.
Then on clearing and the MTS LCH relationship, I don't believe, and we will come back to you if I'm getting this wrong, or Paul, feel free to speak up if I'm getting this wrong. I do not believe that that is a contractual relationship. I believe that is a customer preference and a, we'll call it an asset class-driven destination.
Meaning that the product, mainly the fixed income product that is coming off of MTS, LCH has particular liquidity strength market presence in that area where it would make sense for customers to clear that product within LCH, get the benefits of netting, et cetera. That's a key driver there. On your final question with respect to revenue growth targets, no change in our guidance with respect to revenue targets or any of the other metrics that we put out when we announced the transaction last August. We continue to feel comfortable with those targets.
Thank you. Appreciate it.
Thank you.
Again if you would like to ask a question, please press star one on your telephone keypad. Your next question comes from the line of Chris Turner from Berenberg.
Yes. Good morning, it's Chris Turner from Berenberg. Just a couple of questions from me, please. Firstly, regarding the Information Services division. I guess we spend a lot of time talking about FTSE Russell, actually the strongest growth this year has come from your real-time data business. You delivered 11% revenue growth there despite terminals falling 3%. Please, could you provide some color on the types of firms that are buying that data, why they are buying more of that data than in the past? Perhaps if it's not too much of a stretch, what that tells you more broadly about demand for data and data feeds generally.
Secondly, the agreement that you've signed with Singapore Exchange seems actually to be quite broad in scope. Could you perhaps share some of your strategic thinking behind that partnership? Specifically in terms of the timing, I know Singapore are due to lose their MSCI indices early next year. Is that the kind of timeframe we could think about having these FTSE Russell alternatives up and running? Will it take a little bit longer than that? Thank you.
Okay. Thanks, Chris. Perhaps I'll take the first one. Look, we are pleased with the growth we're seeing in real-time data. We've had a good new business performance there. There certainly are some new customers here, but a lot of this is our ability now to, because we are increasingly shifting away from terminals as the primary method of delivery and pricing to an enterprise license, where more of the information and the data products that are being requested, that are being supplied, are going into our customers through feeds. That has been, and continues to be, a very growing trend. Given the way we're now distributing the data, it gives us the opportunity to broaden out the range of products that we're able to distribute. A lot of this is responding to new demand that's coming from existing customers, as well as some new customers.
Again, good growth in non-display data. Also, I think the ability to capture all the opportunities that are now available to us with enterprise packages now shifting away from terminals to a more enterprise license approach to each customer. A lot more flexibility for us to customize delivery and to price accordingly. This is clearly a trend we're seeing, and as we've talked about in the past, it's very similar to the trends that we're seeing at Refinitiv, and we think also very much a part of the trend going forward, that customers will consume data and analytics in a variety of distribution channels that are beyond the desktop. They're going to be in the cloud, they're going to be through partnerships, they're going to be through feeds. That's a very important part of the opportunity we now have with Refinitiv.
Thanks, David. Chris good morning , I'll take your question on the Singapore relationship. FTSE Russell has a strong relationship with Singapore, the Singapore Exchange, as we do with a number of other exchanges around the world. I think it's, as you know very well, it's one of the strengths of our open access model, and working with partners who can use our products. In August, we did enter into a long-term strategic agreement with the Singapore Exchange for the development of really comprehensive Asian and emerging markets-focused multi-asset index derivatives products. I should just mention, the FTSE China A50 derivatives, which are traded on Singapore Exchange, have seen strong quarter-over-quarter growth in Q3. It's up over 50% to, I think, something along the line of 29 million contracts traded. We do have a lot of confidence in our offering.
We have a lot of confidence in that relationship. To your specific question in terms of the timing of rollout of new product, that is in process. A great example is the launch, we launched over the summer, the FTSE Taiwan Index Futures on SGX. That's grown over three months to be trading over $1 billion per day, and over 1.1 million contracts traded to the end of September. A good sign there, and more to come in that space, I would say. Can't give you specific timing on product rollouts, but more coming there. Hopefully that addresses the question.
Yeah, that's very clear. Thank you both.
Thank you.
Your next question comes from the line of Ian White from Autonomous Research.
Hi. Good morning. Thanks for doing the call. I'll just add one question, please. I noticed that some of your peers are exiting the regulatory reporting business on the grounds that it basically has questionable economics for them. Why is the group better positioned than those peers to remain in the regulatory reporting business, please? Thanks.
Yeah. David, you want to-
Yeah, sure. The regulatory reporting space is one that, as you know, over the last few years, the regs have changed quite a bit. A bunch of our peers or competitors got into that space in response to some of the regulation over the last few to several years. For some of them, they just have not achieved scale, or it has not been a productive use of capital. We can't comment on others' decisions to exit, but I think it is not surprising that given the competitive dynamic and given the number of players that did originally go into it does feel as if that space is consolidating a little bit. Which is probably a healthy consolidation. We feel comfortable that the business, we think its results are solid, and we have no plans with respect to our own business.
Thanks.
Thank you.
Your next question comes from the line of Johannes Thormann from HSBC.
Good morning, everybody. Thank you, David, for all the helpful discussions. Johannes from HSBC. Two questions I have left. First of all, previously you were targeting a double-digit growth in FTSE Russell revenues. Now you're seemingly happy with 4%. What has changed in your views? Secondly, I have to come back to the NTI from LCH. How much are you playing the yield curve? How much is the duration mismatch, which was so far successful? Will this run down, or do you expect to increase it over the next years to keep a healthy level of NTI from this business? Thank you.
Sure. I wouldn't necessarily agree with the premise of your question that we're satisfied with 4% on a reported basis. That's certainly where it is. We're pleased that that business, I think this year, that business, as we said at the beginning of the year, in terms of new sales, was going to be in a bit of a challenging environment, particularly in the first half of the year, and we talked about that in our Q1 call. We're pleased to see that business continuing to build. There certainly are some FX effects on this business on a reported basis, but if we look at it like for like, sequentially, we're very pleased with the growth. We're pleased with the work that we're doing on new product development. We're pleased with the work that we're doing on strengthening our research analytics, and sales forces.
Continue to feel very good about that business. Sort of a difficult market right now, I think, to make future decisions. We did talk about a shift where we were going to move more from a sales model to a customer partnership model. We're very pleased with how that progress is going. We're rolling out a number of new products, in ETFs and ESG. We've got a number of good research projects going on, so we're very pleased with the development there, and we definitely have strengthened both the leadership as well as the people working in our areas of research, sales, and product development. Overall, I think pleased with that and definitely see as a continuing growth business. I think in this market, difficult to say.
I would certainly bring you back to the point that sequentially it has been building this year in a very challenging environment. I think the second question you asked was around NTI. I think on NTI, this is really not about reaching for yield. We earn NTI, as you know, through really two places. About two-thirds of our NTI is really basically a fee, a handling charge, if you will, which is the overnight rate that we agree to return to our customers, minus an agreed spread, which is kind of a handling charge. We can look to invest that. That's invested in, as you know, secured, highly liquid, short-term products that are 30 days, 60 days, 90 days. Whatever we can earn on that is in addition to that. This is not a situation where we, in any way, look to take yield.
We have to manage this within very tight risk parameters around liquidity and investor concentration. Really, we have made good strides, I think, in terms of expanding the range of counterparties, and the investment opportunities that we can have for placing this cash, consistent with our risk parameters. We'll continue to do that. It is not something where we're going to be looking to do anything. We're not going to do anything different on the yield environment. We're going to take opportunities that present themselves with different instruments in different markets, but very consistent with our risk parameters.
Okay. Thank you very much. All the best to you.
Thank you.
Your next question comes from the line of Kyle Voigt from KBW. Your line is now open.
Hi. Thanks for taking my questions. Just two questions from me. The first is on Borsa Italiana. You made it clear that the potential divestiture would happen after the Refinitiv deal closure and those proceeds would go towards debt repayment. Assuming no other remedies are required by the European Commission, is it also fair to assume that you will not be exercising that $2.5 billion equity to cash consideration swap that's available at the Refinitiv deal closure? Second question, just on Refinitiv. You've given an update on the cost plan, which seems to be progressing pretty well. Just wondering if you could provide an update on how those conversations are going on the revenue side with Refinitiv customers to potentially migrate pricing more towards enterprise fees.
Sure. I think I can say pretty cleanly, as we've made it clear in our announcements, we expect to use the proceeds to reduce Refinitiv debt. No expectation at this point that we would use the term that you referred to in our contract in terms of utilizing that $2.5 billion bucket, if you will. No expectation that we'd be using that.
Sorry, remind me, your second question was around? Just on Refinitiv and an update on how the migration of the pricing more towards enterprise basis. That process is ongoing, and as we had mentioned when we've talked about this in the past, this is really a customer-by-customer conversation. Refinitiv continues to have those conversations with their customers as they work through new contractual relationships. Particularly in this environment, where a number of the customers are also feeling the challenges of the environment. That kind of model is continuing to get good reception. We're not in a position today, especially given we haven't even closed on the transaction, to give more specificity or more color on that or any particular contractual agreements with their customers. That approach continues to gain traction.
Thank you very much.
Thank you.
Our last question comes from the line of Bruce Hamilton from Morgan Stanley. Your line is now open.
Thanks. Morning, guys, and congratulations to the CFO. Two questions, just following up on the reduced sort of debts that you're likely to bear on the Refinitiv deal. Sorry, I may have missed this earlier, but can you give any indication on the improvement on the credit rating that you expect, at least one notch better? Should we expect that 30, 40 basis points lower on sort of blended cost of debt going forward? Secondly, given that we think your, on our calculations, your net debt leverage will be comfortably in your range, probably by year 2, how should we think about the ability to do further substantial strategic moves?
Would there be too much of a limitation on management bandwidth given the integration of the Refinitiv deal? Or would you feel past that point after, say, 12 months? I'm just trying to think about, obviously, we may be jumping the gun given you still want to close this deal, but thinking ahead, how quickly will you move on to think about other sort of strategic options beyond?
Yeah. Well, thanks, Bruce. I think maybe I'll answer the first one, and it's probably more appropriate for David to answer the second one. We obviously note the report that S&P put out. If we are able to achieve a rating on the new Comco credit of a low single A rating, obviously that's favorable. You can certainly do your own analysis about credit spreads between a triple B+ and an A-. I think as I said in response to a related question that I got in this earlier, rates are definitely favorable. I think we've said in the past that we had assumed, I think the Refinitiv debt had assumed in our modeling about 6%. We had assumed for our initial modeling somewhere in the range of 3%.
The market has definitely improved lower from a yield and rates perspective now than it was back in August of 2019. Directionally, it's all positive, Bruce, but I think until we actually get into the market, and test different maturity levels and different mixes of currencies, we're not going to really know, and also the mix between fixed and variable. Just directionally, it is definitely favorable from where our earlier projections had been.
On your second question, Bruce, you're obviously correct. If we use the proceeds to pay down Refinitiv debt, we'll get closer to our target range more quickly. We have committed to our investors and to the rating agencies that we want to do that as a priority. Having said that, a couple other things. We have a lot to do as part of our Refinitiv integration, and we will be very focused on that.
We also have to keep our eye on the outside environment. I think we will be pleased when we are in a position with lower leverage that we can continue to consider strategic options. To the extent that we do consider anything, we will apply the discipline that you have seen us apply in the past, and we'll be very focused on attractive returns, situations that make sense from a strategic perspective. Again, none of that is near-term urgency. We are very focused on bringing down our debt, very focused on executing on the integration. We will have that optionality a little bit sooner in the future.
Great. Helpful. Thank you.
Thank you.
There are no further questions at this time. Mr. Paul Froud, I turn the call back over to you.
Great. Thank you very much. As that was the last question, let me just thank everybody on the phone lines. Thank you for your questions. Thanks for those joining on the webcast as well. Finally, thanks and congratulations to David on the completion of your last quarterly conference call. For everybody else, please do reach out to IR team if we can be of any more assistance during the course of the day. Otherwise, we'll end the call now. Operator, back to you. Thank you very much.
And ladies and gentlemen, this concludes today's conference call. Thank you for participating. You may now disconnect.