S&P lowers AqGen Ascensus

S&P said it lowered the corporate credit rating on AqGen Ascensus Inc. to B- from B.

The outlook is stable.

The agency said it lowered the rating on the company's first-lien term loan to B- from B+ and revised the recovery rating to 3 from 2.

S&P said it also assigned the B- issue level rating to the proposed $75 million delayed draw term loan. The 3 recovery rating indicates 50% to 70% expected default recovery.

The agency also said it lowered the rating on Ascensus's second-lien term loan to CCC from CCC+. The 6 recovery rating on the loan is unchanged, indicating 0 to 10% expected default recovery.

The downgrades reflect the company's elevated leverage following the proposed debt-funded acquisitions, S&P said.

This transaction is expected to weaken the company's credit metrics such that its adjusted leverage will remain at about 8x throughout 2018, the agency added.

While S&P said it recognizes that the company has increased its EBITDA both organically and through acquisitions, it believes that it will pursue further debt-funded acquisitions over the next 12 months, which will prevent any meaningful de-leveraging.

The ratings reflect the company's relatively small size and its participation in the retirement and government-savings plan administration markets, which continue to be dominated by large institutional asset-management firms, the agency said.

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