Moody’s rates Cetera loans B2, Caa2

Moody's Investors Service said it assigned a B3 corporate family rating to Aretec Group, Inc., the holding company for Cetera Financial Group, after the announced sale of the company to Genstar Capital.

The agency also assigned a B2 rating to Aretec's proposed first-lien senior secured credit facility and a Caa2 rating to its proposed second-lien senior secured term loan.

The outlook is stable.

The company plans to raise new senior secured debt, including a $100 million senior secured first-lien revolving credit facility, a $775 million senior secured first-lien term loan and a $240 million senior secured second-lien term loan, supported by new sponsor equity to fund the acquisition of Cetera.

“The B3 corporate family rating reflects Aretec's high debt/EBITDA of around 7.5x pro forma the acquisition (including Moody's standard adjustments), a stabilizing financial advisor base, favorable macroeconomic and market environment and growing client asset levels,” Moody’s said in a news release.

“Aretec's retention of advisors has been stronger than expected, which will allow the firm to regain its revenue growth targets at a faster pace. The firm's increase in debt following the acquisition pressures the firm's financial flexibility and limits its room for additional debt at the existing rating level.”

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