Fitch rates American Capital notes BB-

Fitch Ratings said it expects to assign a BB- rating to American Capital, Ltd.'s $350 million senior unsecured notes due September 2018.

The proceeds will be used for general corporate purposes, including new portfolio investments.

Fitch said it expects the issuance to have minimal impact on leverage due to the $150 million scheduled amortization payment on the company's secured term loan, which took place in August. Leverage is expected to increase from 0.11x at June 30, 2013 to about 0.15x on a pro forma basis, the agency said.

The equalization of the unsecured ratings with American Capital's long-term issuer default rating of BB- reflects the company's relatively low leverage and the increasing amount of unsecured funding in the capital structure, Fitch said. American Capital also has a secured debt rating of BB+.

Taking into account the scheduled amortization payment, unsecured debt is expected to be about 40% of total debt following the new issuance, the agency said.

Fitch said it believes the unsecured component will improve the company's funding flexibility and expects unsecured debt to increase in the future as the company's secured credit facilities amortize over time.

The ratings also consider the company's improved operating performance, driven by increased income from its asset-management strategies, appropriate leverage relative to equity investment exposure, improved debt-maturity profile and stronger liquidity, the agency said.

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