Fitch drops Allied Capital to junk

Fitch Ratings said it downgraded Allied Capital Corp.'s long-term issuer default rating, senior unsecured debt and secured debt to BB from BBB. Ratings are on Rating Watch negative.

The downgrades reflect the expectation that Allied will be in violation of its 200% asset coverage requirement following the recognition of significant unrealized portfolio depreciation in the fourth quarter of 2008, according to the agency.

The reduction in asset coverage will result in a covenant violation on Allied's revolving credit facility and private notes, Fitch noted.

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