Fitch Affirms SunGard's IDR at 'B'; Stable Outlook.

NEW YORK -- Fitch has affirmed the following ratings for SunGard Data Systems Inc. (SunGard):

-- Issuer Default Rating (IDR) at 'B';

-- $1 billion senior secured revolving credit facility due 2011 at 'BB-/RR2';

-- $3.9 billion senior secured term loan due 2013 at 'BB-/RR2';

-- $250 million 3.75% senior notes due 2009 at 'B/RR4';

-- $250 million 4.875% senior notes due 2014 at 'B/RR4';

-- $2 billion senior unsecured notes due 2013 at 'B-/RR5';

-- $1 billion 10.25% senior subordinated notes due 2015 at 'CCC+/RR6'.

The Rating Outlook is Stable.

The ratings reflect: SunGard's significant debt levels and debt service requirements; Fitch's expectation that meaningful debt reduction is unlikely over the foreseeable future, given limited debt amortization requirements over the next few years; pressured operating EBITDA margins due in part to aggressive pricing related to retaining long-term customer contracts; and integration risks resulting from the company's historical bias toward augmenting mature organic revenue growth rates with acquisitions.

The ratings are supported by SunGard's: leading positions in each of its businesses with significant scale and product breadth; strong recurring revenue profile driven by longer-term contracts and significant switching costs; consistent free cash flow; and well-diversified customer portfolio.

The Stable Rating Outlook reflects Fitch's expectations that, despite the aforementioned margin erosion, SunGard's operating performance and credit protection measures should remain consistent, driven primarily by higher revenues. SunGard's longer-term customer contracts (typically three to five years) and a recurring revenue stream that represents almost 90% of total revenues are also expected to continue contributing to its consistent operating performance. Total adjusted leverage (adjusted for rent expense and A/R securitizations) should remain above 6.5 times (x) with interest coverage at just under 2.0x. While organic growth rates for all three of its segments - financial systems (FS), availability services (AS), and higher education and public sector systems (HEPS) - are anticipated to be in the low- to mid-single digits over the next several years, SunGard will continue to augment more mature market growth rates via smaller tuck-in acquisitions, particularly in the more fragmented FS and HEPS segments, and some share gains. Fitch believes SunGard will continue to generate free cash flow approximating $150 million annually, of which the company is required to use 50% of these annual amounts not reinvested as of year end for reducing term loan balances.

The Recovery Ratings reflect Fitch's belief that SunGard would be reorganized rather than liquidated in a bankruptcy scenario, given Fitch's estimates that the company's ongoing concern value of $5.7 billion is significantly higher than its projected liquidation value of approximately $251 million, due mostly to the significant value associated with SunGard's intangible assets. In estimating ongoing concern value, Fitch assumes a 7x multiple and discounts SunGard's normalized operating EBITDA by 30%, reflecting some concentration to FS and annual rollover risk of 25% of the company's long-term contract portfolio. After reductions for administrative and cooperative claims, Fitch arrived at an adjusted reorganization value of approximately $4.9 billion. Based upon these assumptions, the senior secured debt, including $1 billion revolving credit and nearly $4 billion of term loan facilities recover 88%, resulting in 'RR2' ratings for both tranches of debt. The senior notes' 'RR4' recovery rating reflects the partial security these notes received during the leveraged buyout process and Fitch's belief that the secured bank debt is in a superior position due to its right to the company's intellectual property. The 'RR5' recovery rating for the $1.6 billion senior unsecured debt reflects Fitch's estimate that 11%-30% recovery is reasonable, while the 'RR6' recovery rating for the $1 billion of subordinated debt reflects Fitch's belief that negligible recovery would be achievable due to its deep subordination to other securities in the capital structure.

As of Sept. 30, 2006, Fitch believes SunGard's liquidity position was sufficient and supported by: approximately $268 million of cash; $1 billion of senior secured revolving credit facilities expiring 2011 (of which $23 million of letters of credit was outstanding and, therefore, unavailable for borrowings as of Sept. 30, 2006); a $450 million accounts receivable (AR) securitization program expiring 2011 (of which approximately $371 million was outstanding at Sept. 30, 2006). As of Sept. 30, 2006, total on-balance-sheet debt was approximately $7.4 billion and consisted primarily of: $3.9 billion of senior secured term loans expiring 2013; approximately $250 million of 3.75% senior notes due 2009; approximately $250 of 4.875% senior notes due 2014; $1.6 billion of 9.125% senior unsecured notes due 2013; $400 million of floating-rate senior unsecured notes due 2013; and $1.0 billion of 10.25% of senior subordinated notes due 2015. Debt amortization requirements under the term loans are only $40 million in each of the next two fiscal years.

Fitch's rating definitions and the terms of use of such ratings are available on the agency's public site, www.fitchratings.com. Published ratings, criteria and methodologies are available from this site, at all times. Fitch's code of conduct, confidentiality, conflicts of interest, affiliate firewall, compliance and other relevant policies and procedures are also available from the 'Code of Conduct' section of this site.