KEY RATING DRIVERS
The notes will rank equally with AMG's other unsecured debt outstanding. Proceeds from the issuance will be used to repay borrowings under AMG's unsecured revolving credit facility. As of
Given that the proceeds from the new issuance will be used to repay outstanding borrowings under the revolving credit facility, Fitch does not envision there being a material impact on the company's leverage levels as a result of the issuance.
Leverage, measured as gross debt to adjusted EBITDA, was 1.5x at
AMG had a very strong year in terms of assets under management (AUM) growth and operating performance. AUM increased to
AMG's ratings reflect its increased scale and diversity in the asset management space, strong cash flow generation, improved funding profile, as well as management's commitment to leverage of 2.75x or less. Ratings take into account AMG's highly acquisitive business model and AUM concentration in equities, which is a relatively more volatile asset class.
Positive rating action could be driven by sustained improvement in leverage and interest coverage metrics and increased AUM diversification while maintaining solid investment performance at the affiliate level.
Fitch expects that AMG will remain disciplined in its future acquisition strategy with regard to pricing multiples and transaction size. Aggressive acquisitions funded by increased debt levels, deterioration in leverage above management's articulated level, prolonged investment underperformance at major affiliates, significant increase in equity puts by affiliates leading to liquidity strains and/or unexpected operational losses or significant net outflows could lead to negative rating action.
AMG is a global asset management company with equity investments in leading boutique investment management firms. As of
Fitch currently rates AMG as follows:
Affiliated Managers Group, Inc.
--Long-term IDR 'BBB';
--Senior bank credit facility 'BBB';
--Senior unsecured debt 'BBB'.
AMG Capital Trust II
--Trust preferred securities 'BB'.
The Rating Outlook is Stable.
Additional information is available at 'www.fitchratings.com'.
-- 'Global Financial Institutions Rating Criteria' (
--'Investment Manager and Alternative Funds Criteria' (
Global Financial Institutions Rating Criteria
Investment Manager and Alternative Funds Criteria
Mohak Rao, CFA, +1-212-908-0559
Source: Fitch Ratings
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