S&P turns Resolute outlook to negative

S&P said it changed its outlook for Resolute Investment Managers to negative from stable and affirmed the B issuer rating, the B rating on the first-lien term loan, and the CCC+ rating on the second-lien term loan. The recovery rating on the first-lien secured debt remains 3, indicating meaningful (50%) recovery, and the recovery rating on the second-lien secured debt remains 6, indicating negligible (0%) recovery in default.

“Resolute's $550 million first-lien term loan is due in April 2024. The company does not have adequate liquidity to make this payment without refinancing,” the agency said in a press release.

S&P noted that Resolute’s assets under management dropped about 16% for the 12 months ended Dec. 31. “AUM declined in 2022 owing to market volatility and continued net outflows. As a result, we expect earnings to decline and leverage to rise to around 7x over the next 12 months, our downside threshold for the rating.”

Additionally, the agency warned that new loans would come with a higher interest rate than Resolute’s current loans.

“We balance those characteristics against its strong margins, improving diversification, and adequate liquidity for the next 12 months,” S&P said.

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