Fitch cuts Oaktree, rates notes A-

Fitch Ratings said it downgraded Oaktree Capital Group LLC and its senior unsecured debt ratings to A- from A and its preferred stock to BBB from BBB+. The agency also rated Oaktree’s planned senior unsecured notes A-. Fitch also cut its ratings for Oaktree Capital I, LP, Oaktree Capital II, LP, Oaktree AIF Investments, LP and Oaktree Capital Management, LP to A- from A.

“The rating downgrades reflect Fitch's belief that Oaktree will not be able to generate sufficient fee-related EBITDA (FEBITDA) growth to offset the impact of the incremental debt issuance and bring leverage (debt to FEBITDA) back within Fitch's a category benchmark range of 0.5x-2.5x for alternative investment managers (IMs) by YE22, as previously expected. Oaktree's leverage has been elevated for several years, relative to Fitch's a category benchmark range, given delays in fee generation from flagship opportunistic credit funds, lower-than-peer FEBITDA margins and an increase in outstanding debt,” the agency said in a press release.

Oaktree plans to use the proceeds for general corporate purposes.

The outlook is stable.

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