Fitch lowers Fortress, rates debt BB+

Fitch Ratings said it downgraded the long-term issuer default ratings of Fortress Investment Group LLC and its related entities to BB+ from BBB and short-term issuer default rating to B from F2.

The ratings also were removed from negative watch.

The outlook is stable.

Fitch also said it assigned an expected rating of BB+ to the $1.4 billion of five-year secured debt, which is being issued in connection with the company's announced acquisition by SoftBank Group Corp.

The acquisition will be funded by a combination of debt proceeds, balance sheet cash and an equity contribution from SoftBank, the agency said.

The acquisition is expected to close in the second half of 2017, Fitch noted.

The downgrade was driven by the expected increase in leverage following the issuance of the secured debt, the agency said.

The company's leverage, as measured by its debt-to-fee-related EBITDA (FEBITDA) is expected to increase to about 9.3x based on 2016 FEBITDA and $1.4 billion of secured debt, which is well above the BBB quantitative benchmark range of 2.5x to 4.0x, Fitch said.

The agency said it believes leverage could decline relatively quickly over the outlook horizon, driven by debt principal reduction from a mandatory 50% free cash flow sweep.

But, this will be highly dependent upon the company's ability to realize incentive income on its funds and the stability of its fee-earning assets under management (FAUM) and fee rates, Fitch said.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.