Moody's rates Ares capital notes Baa3

Moody's Investors Service said it assigned a Baa3 rating to Ares Capital Corp.'s new $650 million senior unsecured notes due 2024.

Ares Capital's existing ratings, including its Baa3 issuer rating, are not affected by the transaction and the company's issuer outlook remains positive.

The ratings reflects Ares Capital's Baa3 issuer credit profile, priority and proportion of senior unsecured debt in the company's debt capital structure and the strength of the senior notes' asset coverage, Moody's said.

The notes will rank pari passu with Ares Capital's existing senior unsecured debt, the agency said.

The proceeds will be used primarily to repay existing indebtedness under revolving credit facilities, Moody's said.

The ratings are supported by the company's history of strong earnings and low earnings volatility, balanced investment portfolio characteristics and effective liquidity management, the agency said.

The rating also recognizes the company's strong capitalization due to compliance with its regulatory asset coverage requirement, resulting in low expected loss given default compared to other specialty finance companies, Moody's said.

The positive outlook is based on an expectation that Ares Capital's transition to higher target leverage will be accompanied by strong asset quality and earnings and that liquidity and capital strength will continue to be effectively managed, the agency said.

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