S&P: American Capital notes B+

Standard & Poor's said it assigned a B+ senior unsecured debt rating on American Capital Ltd.'s proposed $350 million notes due in 2018.

The company's long-term issuer credit rating remains at BB-. The one-notch differential represents the structural subordination of the senior unsecured notes relative to the company's outstanding $450 million senior secured term loan, S&P said.

Although total debt would increase to $800 million with the proposed notes, the company's capital ratios on a pro forma basis is expected to remain stronger than those of most rated business development companies, the agency said.

The proceeds will be used for general corporate purposes, including growing the company's portfolio, S&P said.

The ratings reflect the company's hybrid business profile, low leverage compared with its business development company peers, improving earnings and cash flow and adequate liquidity and funding profile, the agency said.

The company's high level of nonaccrual loans, exposure to equity investments and predominantly illiquid investments within its private finance investment portfolio offset these strengths, S&P said.

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