Moody's confirms 3i

Moody's Investors Service said it confirmed the Baa1 senior unsecured debt and issuer ratings of 3i Group plc. The short-term rating was confirmed at P-2.

The outlook is negative. This action concludes the review for downgrade begun on Dec. 18.

Moody's said the confirmation reflects the improvement to gearing and market value based leverage levels, the commitment to reduce debt and maintain higher cash positions and the relatively high level of investment realizations despite difficult market conditions.

Ratings also consider the significant impact of much lower realized profits from divestments on cash flow generation as well as the reduced benefit of the company's diversified portfolio following a much higher observed correlation among most industries, the agency noted.

"3i's cash flow from operations has, however, become increasingly negative forcing the company to depend more heavily upon realizations from sales of investments to service its debt obligations," Marjan Riggi, a vice president at Moody's, said in a statement.

Factors underpinning ratings are 3i's solid franchise, its reference-player status, its tight investment decisions and asset allocation processes as well as the granularity of its portfolio, the agency added.

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