S&P assigns Ares notes BBB-

S&P said it assigned a BBB- issue rating to Ares Finance Co. III LLC's proposed subordinated notes due in 2051. Ares Finance is an issuing subsidiary of Ares Management Corp. The size of the issuance will be determined by market conditions, but S&P said it assumed the notes will be between $300 million and $400 million.

“Since the notes are deferrable for at least five years, subordinated, and have a maturity of longer than 20 years, we assigned intermediate (50%) equity credit to this debt issuance. We view the company's proposed subordinated notes issuance as hybrid capital with intermediate equity content and rate it two notches below our BBB+ issuer credit rating on Ares, reflecting subordination and optional deferability,” S&P said in a press release.

The proceeds will be used to fund future growth after redeeming the company's perpetual preferred stock and expect that Ares will operate with leverage of 1.5x and 2x during the next 12-24 months.

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