Fitch could lower Springleaf

Fitch Ratings said it placed Springleaf Finance Corp.’s B long-term issuer default rating and B/RR4 senior unsecured debt ratings on Rating Watch Negative.

The action follows Springleaf's definitive agreement to acquire OneMain Financial Holdings, Inc. for $4.25 billion. Springleaf expects to fund the transaction with a combination of cash ($3.3 billion) and debt ($1 billion).

The transaction is subject to customary closing conditions and regulatory approvals and is expected to close during the third quarter of 2015 at which point Fitch would expect to resolve the Rating Watch Negative.

Assuming the acquisition is consummated on the agreed-upon terms, is completed without raising additional equity, and absent material credit developments in the interim, the agency expects it to result in at least a one-notch downgrade of Springleaf's long-term issuer default rating primarily reflecting the increase in leverage and execution and integration risk associated with the transaction, which will likely consume meaningful time and effort from Springleaf's senior management team.

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