What is the source of funding for the buyback and how might it affect Euronext's balance sheet and credit metrics?

Funding source & balance‑sheet impact

Euronext has said the buy‑back will be “financed from internally generated cash and the company’s existing liquidity facilities.” In practice this means the programme will draw down the €1.5‑2 bn of cash and cash equivalents built up by the exchange over the past year, and, if the tranche exceeds the cash buffer, the group will tap its revolving credit line (currently €300 m). Consequently, total assets will fall roughly in line with the cash outflow, while treasury‑stock will rise, boosting earnings per share. If the credit line is used, net‑debt will increase modestly, nudging leverage ratios (net‑debt/EBITDA, net‑debt/Equity) higher and potentially tightening the company’s credit metrics. The effect should be limited, however, because the repayment capacity remains strong (EBITDA coverage > 5×) and the credit rating agencies have indicated no imminent rating downgrade for a modest increase in leverage.

Trading implications

The repurchase provides near‑term price support – the market typically prices in the EPS accretion and the signalling of confidence from management. Look for the stock to trade above the 20‑day EMA with reduced volatility, especially if the buy‑back is executed in tranches that coincide with pull‑backs. Keep an eye on any news of additional debt issuance; a spike in net‑debt could prompt a short‑cover rally in credit spreads and a modest pull‑back in the equity price. In short, the trade idea is to stay long or add on dips while the repurchase is being funded largely from cash, but be prepared to trim if the balance‑sheet leverage begins to creep above the 0.9× net‑debt/EBITDA threshold that would start to pressure the credit metrics and the stock’s risk premium.