Fitch rates Ares convertibles BBB

Fitch Ratings said it expects to assign a BBB rating to Ares Capital Corp.'s unsecured convertible debt issuance.

Fitch said it does not expect a material impact on the company's leverage levels as a result of the issuance because proceeds will be used largely to repay outstanding borrowings and for general corporate purposes.

The expected rating is equalized with the ratings assigned to Ares' existing senior unsecured debt, as the new notes will rank equally in the capital structure, the agency said.

The equalization of the unsecured ratings with the secured debt rating reflects Ares' relatively low leverage, focus on senior debt investments and an expectation that proceeds from the issuance will be used to repay a portion of secured debt outstanding, Fitch explained.

The ratings consider the company's scalable platform, consistent operating performance through a variety of market and economic cycles, moderate portfolio concentrations and demonstrated access to the debt, the agency said.

The ratings are constrained by the company's above-average exposure to equity investments, Fitch said.

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