Moody's downgrades 3I Group

Moody's Investors Service said it downgraded the senior unsecured debt rating and issuer rating of 3i Group plc to A1 from Aa3. In addition, senior backed ratings of 3i Holdings plc were downgraded to A1 from Aa3.

All ratings carry stable outlooks.

Moody's said that its rating action follows 3i indicating that after its intended share buyback program, its optimal gearing (defined by the company as ratio of consolidated net borrowing / consolidated shareholders' funds) would move to a range of 30% to 40%. Moody's regards this prospective gearing level as higher than the company's historical average going back to a period starting in 1998.

Moody's noted that, with the exception of the financial year ending March 2003, when conditions in private equity markets had been unusually difficult, 3i had been successful in maintaining a gearing ratio at or below 30%.

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