S&P puts EIG Management on watch

S&P said it placed its BB+ issuer credit rating on EIG Management Co. LLC on CreditWatch with negative implications.

In addition, S&P placed its BB+ issue ratings on the company's first-lien notes on CreditWatch with negative implications.

The CreditWatch follows EIG's announcement that it will form a joint venture with FS Investments to jointly manage the FS Energy and Power Fund, a non traded business development company with approximately $4 billion in assets. EIG expects to complete the transaction in 2018, following shareholder approval.

“In our view, this acquisition will add incremental diversity to EIG's concentrated business. Additionally, we view favorably FS Energy and Power Fund's closed-end structure. However, we believe EIG may finance the transaction with additional debt, leading to higher leverage than our current expectations (modestly lower than 2x in 2018-disregarding the acquisition) and pressure on the BB+ ratings,” S&P said in a news release.

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