Moody’s rates Advisor Group, loan B1

Moody's Investors Service said it assigned a B1 corporate family rating to Advisor Group, Inc. and a B1 rating to the company’s $600 million seven-year senior secured term loan.

The proceeds of the loan will be used to retire existing debt, fund the acquisition of Signator, cover related fees and expenses associated with the transaction and pay a dividend to shareholders.

The outlook is stable.

Moody’s said the ratings reflect the company’s relatively small scale in terms of net revenues, high leverage as measured by debt to EBITDA with Moody's adjustments of 5.2x, low profitability and the company's limited operating history as an independent company.

The agency said it also considers that the use of the bulk of the debt proceeds for a shareholder dividend, rather than for investment in the business, is not an optimal allocation of capital for creditors.

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