Moody’s downgrades RCS Capital

Moody's Investors Service said it downgraded RCS Capital Corp.’s ratings, including its corporate family rating to B3 from B2.

The outlook is negative.

The agency also lowered RCS Capital’s $575 million senior secured first-lien term loan to B3 from B2, $25 million senior secured first-lien revolving credit facility to B3 from B2 and $150 million senior secured second-lien term loan to Caa2 from Caa1.

This concludes the review that was initiated on Nov. 14

Moody's said the adverse repercussions from the accounting and reporting issues at American Realty Capital Properties, Inc. (ARCP) on RCS Capital’s wholesale distribution business, together with a recent slowdown in nontraded REIT transactions and liquidity events, heightens the risk of RCS Capital potentially breaching its debt financial covenants during 2015.

The agency said the various regulatory investigations and lawsuits pursuant to the matters reported by ARCP's audit committee on March 2, 2015 could potentially result in further adverse publicity and loss of business for RCS Capital’s affiliates, and, in turn, for RCS Capital’s wholesale distribution and capital markets advisory services businesses.

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