Moody's views First Eagle negatively

Moody's Investors Service said it changed its outlook for First Eagle Holdings, Inc. (FEH) to negative from stable and affirmed its Ba2 corporate family and loan ratings.

“The change in outlook to negative is driven by FEH's elevated leverage (5.4x as of YE 2022) which remains above our leverage downgrade trigger of 5x. The company's leverage rose rapidly in 2022 due to the significant market declines and the partially debt-funded acquisition of credit manager Napier Park. The Napier Park acquisition was consistent with the company's strategic plan to diversify its investment platform by adding more long-duration AUM and income-oriented strategies.

“However, the company incurred $160 million of higher-cost private debt in funding the acquisition which put further pressure on its financial flexibility. Similar to the majority of active investment managers, the firm has also experienced negative outflows historically and the company's investment in distribution and product diversification has been weighing on margins,” Moody’s said in a press release.

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