S&P rates Ares preferreds BBB-

S&P said it assigned a BBB- rating to Ares Management LP’s proposed perpetual preferred units.

The size of the issuance will be determined by market conditions, but assumed to be no more than $400 million.

The issuer credit rating on the company is BBB+ with positive outlook.

The proceeds will be used to fund $275 million of transaction support related to Ares Capital Corp.’s acquisition of American Capital Ltd., S&P explained.

Any remaining proceeds will be used for general corporate purposes, including potential acquisitions and investments and repayments of the company’s revolving credit facility, the agency said.

The company’s perpetual preferred units are considered hybrid capital with intermediate equity content and are rated two notches below the BBB+ issuer credit rating on Ares, reflecting subordination and optional deferability, S&P said.

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