Moody’s cuts RCS Capital to Caa3, loans to Caa2

Moody's Investors Service said it downgraded RCS Capital Corp.’s corporate family rating to Caa3 from Caa1 and its $575 million senior secured first-lien term loan and $25 million revolving credit facility to Caa2 from Caa1.

At the same time, the agency affirmed the Ca rating on RCS' $150 million senior secured second-lien term loan.

The outlook is developing.

The actions follow RCS' announcement that it agreed in principle with the majority of its first- and second-lien debt holders to amend its capital structure in a pre-arranged Chapter 11 bankruptcy filing.

Moody's said the downgrades reflect RCS' inability to obtain significant fresh third party capital investment to support its independent retail advisory franchise, with a resultant heightened level of uncertainty surrounding the magnitude of creditor losses.

RCS' inability to attract a third party equity investor, after several months of effort to attract such funding, is evidence of diminished franchise value, the agency said.

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