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BlackRock’s Outlook Lowered by Moody’s on Debt Concern


BlackRock‘s (NYSE: BLK) outlook has been downgraded to negative from stable by Moody’s Investors Service. The action followed the company’s announcement to acquire Preqin for almost $3.2 billion (£2.55 billion) in cash. This marked the second major deal for the company.

Also, the rating agency affirmed the senior unsecured Aa3 ratings of BlackRock and its subsidiary BlackRock Funding, Inc. Additionally, the company’s long-term and short-term issuer ratings have been affirmed at Aa3 and P-1, respectively.

Reasons Behind Outlook Downgrade

The change in BlackRock’s rating outlook to negative is attributed to the substantial size and scope of two significant acquisitions announced within a brief period. Alongside the recently disclosed buyout of Preqin, which will be financed through new debt, BlackRock Funding has already secured debt to finance the $3.0 billion cash component of its $12 billion acquisition of Global Infrastructure Partners (“GIP”). This GIP deal is expected to close later this year.

These acquisitions are set to elevate BlackRock’s adjusted debt by more than $6 billion, taking it to approximately $14.7 billion. Consequently, the company’s leverage ratio is projected to rise to between 1.6 and 1.7, slightly exceeding Moody’s leverage-related downgrade trigger of 1.5.

While Moody’s anticipates that BlackRock’s leverage ratio will eventually decline below 1.5, this is …

Full story available on Benzinga.com

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