S&P: HUB outlook negative

Standard & Poor's said it revised the outlook on HUB International Ltd. to negative from stable and affirmed its B counterparty credit and CCC+ senior unsecured debt ratings.

The agency also assigned a B rating on HUB's planned $200 million incremental senior secured term loan due in June 2014 with 3 recovery rating.

"The outlook revision to negative primarily reflects HUB's increased debt burden following the planned $200 million incremental term loan, as well as the recent C$30 million Canadian revolving credit facility that the company entered into in July 2009," S&P analyst Julie Herman said in a statement.

Proceeds will be used for acquisitions, including smaller fold-in brokerages and potentially a new hub brokerage.

"We believe the company is strategically taking advantage of a robust acquisition pipeline and relatively attractive financing to expand its business profile," Herman said.

"However, we believe this strategy heightens the company's credit risk profile because of the increase in leverage, at least through 2010, as well as execution risk regarding identifying profitable acquisition targets."

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