(The following statement was released by the rating agency)
Oct 5 - Fitch Ratings has assigned a 'BBB-' rating to Affiliated ManagersGroup Inc.'s
(AMG) $125 million senior unsecured retail notes. The noteshave a coupon of 5.25% and will mature on Oct. 15, 2022.
The notes will be callable, in whole or part, at any time on or after Oct. 15,2015 at the issuer's option. The notes will rank equally with AMG's otherunsecured debt outstanding. Proceeds from the issuance will be used to repayborrowings under AMG's unsecured revolving credit facility. As of Sept. 28,2012, AMG had $195 million outstanding under its revolving credit facility.
Given that the proceeds from the new issuance will be used to repay outstandingborrowings under the revolving credit facility, Fitch does not envision therebeing a material impact on the company's leverage levels as a result of theissuance.
Leverage, measured as gross debt to trailing 12 months adjusted EBITDA, was2.35x at the second quarter of 2012.
RATING DRIVERS AND SENSITIVITIES
AMG's ratings reflects its growing scale in the asset management space, solidinvestment performance by its affiliates, strong cash flow generation, andadequate leverage and interest coverage ratios. Ratings also factor in thecompany's inherent exposure to volatility in broader financial markets.
Improvement in current leverage and interest coverage metrics and consistentoperating and investment performance could lead to positive rating action.Conversely, aggressive acquisitions funded by increased debt levels, materialdeterioration in leverage or interest coverage ratios, sustained investmentunderperformance at major affiliates, significant increase in equity puts byaffiliates leading to liquidity issues, and/or unexpected operational losses orsignificant net outflows, could lead to negative rating action.
Fitch currently rates AMG as follows:
Affiliated Managers Group Inc.--Long-term Issuer Default Rating (IDR) 'BBB-';--Senior bank credit facility 'BBB-';--Senior convertible notes 'BBB-';--Senior unsecured retail notes 'BBB-'.AMG Capital Trust IAMG Capital Trust II--Trust preferred securities 'BB-'.The Rating Outlook is Stable.
(Caryn Trokie, New York Ratings Unit)