S&P rates Victory Capital loan BB-

S&P said it rated Victory Capital Holdings Inc.’s planned $505 million seven-year term loan a BB- issue and 4 recovery ratings, reflecting an expectation of average recovery (45%). The agency also revised the outlook to stable from positive, citing its expected increase in leverage.

Victory agreed to buy WestEnd Advisors for up to $800 million. Victory plans to fund the acquisition with the term loan, bringing total outstanding gross debt to nearly $1.2 billion.

“The outlook revision reflects our view that the acquisition and subsequent debt issuance will push leverage, as measured by gross debt to EBITDA, to the mid-3x range from just below 2x. Nevertheless, we still expect leverage to be well within our tolerances despite the added debt given Victory's history of aggressive debt repayment after the USAA acquisition,” S&P said.

S&P noted that since 2019, Victory has repaid about $454 million of its debt, leading to lower leverage and interest coverage metrics.

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