S&P: Arrow Global view now negative

Standard & Poor’s said it revised its outlook on Arrow Global Group plc to negative from stable. The B+ counterparty credit rating was affirmed.

S&P said the outlook revision follows Arrow Global’s announcement on Sept. 24 that it intends to acquire Capquest, also a purchaser of distressed debt, for £158 million.

“In our view, the acquisition will reduce the group’s headroom in terms of leverage metrics in the event of a material underperformance of future collections. The outlook revision also reflects our view of management’s willingness to take on additional debt and weaken Arrow Global’s financial profile as a result of the fully debt-financed acquisition,” S&P said in a news release.

“However, we note that, despite having a somewhat shorter track record than its peers, Arrow Global has demonstrated good operating performance and was able to reduce leverage following its first £220 million bond issuance in January 2013.”

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