S&P says the its ‘BBB-/A-3’ long and short-term counterparty credit ratings on F&C have been placed on CreditWatch with negative implications, whilst also doing the same to F&C’s senior unsecured and subordinated deferrable debt.
The ratings agency believes F&C to be highly leveraged and has less ability to service its debt in comparison to similarly rated asset managers.
F&C is to acquire Thames River for an initial £33.6m, with the deal set to rise to a maximum of £53.6m. Before the announcement, S&P says under its base-case scenario in which global equity markets would modestly improve, it expected F&C’s business flows to improve as well as the firm’s profitability and debt-serving metrics.
S&P credit analyst David Tate says: “Standard & Poor’s aims to resolve the CreditWatch placement in the coming weeks, after discussions with F&C’s management regarding the impact of the acquisition.”