Moody's changes Investcorp outlook to stable

Moody's Investors Service said it changed the outlook for Investcorp Bank BSC, Investcorp Capital Ltd. and Investcorp SA to stable from negative. The Ba2 ratings of the backed senior debt of Investcorp Capital and Investcorp were affirmed.

The agency said the rating action captures Investcorp's balance sheet deleveraging, reduced on-balance sheet risk and ongoing recovery in fee revenue. Investcorp's debt levels declined to $1.2 billion as of June 2013 from $2.6 billion as of June 2009. Its investment portfolio declined to 1.9x shareholder equity from 2.9x over the same period, affording the company greater flexibility to withstand adverse market developments, Moody's said.

Despite these material improvements, the ratings continue to reflect the limited global scale of Investcorp's operations and risks inherent in the company's business model, including fairly high, albeit declining, balance sheet exposure to private equity investments and the company's still volatile earnings profile, the agency said.

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