Equinix Inc.

The stable outlook reflects our belief that management is committed to maintaining the financial discipline associated with an investment-grade rating by funding expansion with a balanced mix of debt and equity, such that it maintains S&P Global Ratings-adjusted leverage below 4.25x. Our current assessment can tolerate minimal free operating cash flow (FOCF) generation over the next year or two so long as we believe expansion remains strategic and profitable. We could lower the rating if the company pursues debt-financed acquisitions or expansion projects, such that lease-adjusted net leverage rises above 4.25x and funds from operations (FFO) to debt falls below 15% for a sustained period. Although less likely, we could lower the rating if there are material deficits in FOCF

...Equinix is by far the global leader in providing interconnection, which we believe is the most important competitive advantage for a data center operator. At the core of Equinix' customer base is more than 1,800 network providers that connect with each other in its facilities to form the backbone of the internet at over 5,500 global exchange ports housed by Equinix. In turn, these interconnected facilities become a vital destination for cloud service providers (CSPs) looking for access to a variety of communication networks. Of course, a variety of CSPs also attracts large enterprises aiming for a direct, secure, low-latency connection. Once established, these interconnected data centers are virtually impossible to replicate or dislodge, which we believe will enable Equinix to maintain sustainable pricing power....

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