S&P views Russell Investments negatively

S&P said it changed its outlook for Russell Investments Cayman Midco Ltd. to negative from stable and affirmed its B+ issuer and debt ratings.

Russell plans to extend its $1.16 billion first-lien term loan to May 2027 from May 2025. The extension is expected to feature cash and payment-in-kind original issue discount, with the latter effectively bringing the debt balance to $1.21 billion, and raising the cash spread on the debt to SOFR + 5%, in addition to 1.5% of PIK interest, S&P said.

“We view favorably the lengthened debt tenor, but the incremental interest pressures EBITDA interest coverage metrics,” the agency said in a press release.

S&P noted the negative outlook considers an estimate that Russell will operate with EBITDA interest coverage under 2x over the next 12 months. The company's revenue fell 10% year over year in the first nine months of 2023, mostly due to weak markets and net outflows leading to lower investment management fee revenue.

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