Moody's may upgrade Ares Capital

Moody's Investors Service said it is reviewing Ares Capital Corp.'s Ba1 corporate family and Ba1 senior unsecured ratings for upgrade.

This follows news that the company revised its leverage target in connection with its adoption of the more liberal regulatory minimum asset coverage ratio, Moody's said.

The review for upgrade is based on an expectation that Ares Capital will maintain a cushion in relation to the revised 150% regulatory minimum asset coverage ratio (ACR) that is stronger than the cushion the company has maintained historically versus the prior 200% regulatory minimum ACR, the agency said.

The review also reflects an expectation that Ares Capital will use incremental leverage to invest in a mix of investments that reflect its historical bias toward senior secured loans, which are less risky than subordinated loans and equity investments, Moody's said.

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