Moody's cuts FinCo I to junk

Moody's Investors Service said it downgraded FinCo I LLC's (Fortress) senior secured first-lien term loan and its bank credit facility ratings to Ba1 from Baa3. The agency assigned a corporate family rating of Ba1, probability of default of Ba1-PD and withdrew the Baa3 issuer rating. The outlook is changed to stable from negative.

“The downgrade to Ba1 from Baa3 reflects Moody's view that Fortress' leverage is unlikely to return to an investment-grade level in FY 2022. Moody's moved Fortress' outlook to negative from stable back in May 2020 because of high leverage and its concern that economic disruption from the Covid pandemic was likely to slow the company's performance fee generation and asset realizations. Despite the strong recovery in the U.S. economy, Fortress' leverage (3.5x) has remained above our expectation for an investment-grade rated company,” the agency said in a press release.

Additionally, Moody’s noted the trend in realized performance fees has not met its expectations.

The stable outlook reflects the position that Fortress is well positioned within the Ba1 rating category even if economic conditions deteriorate, the agency said.

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