S&P lowers Ares Capital

S&P said it lowered its issuer credit rating on Ares Capital Corp. to BBB- from BBB.

The outlook is stable.

The agency also lowered the ratings on the company's senior unsecured and senior secured debt to BBB- from BBB.

The company announced that its board of directors voted to approve the adoption of the modified asset coverage requirement allowed by the Small Business Credit Availability Act with regard to business development companies.

Accordingly, the company's applicable asset coverage ratio will decline to 150% from 200% about one year from now, which effectively increases its maximum allowed debt-to-equity ratio to about 2 to 1 from 1 to 1, the agency explained.

S&P said that as a result, its anchor for Ares is now bb+, which is the starting point for its ratings on business development companies that adopt the lower asset coverage requirement.

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