21/05/2010 Author: Shannon Hawthorne

Man Group takeover plans spark credit rating concerns

Moody’s Investor Services, Fitch Ratings and Standard & Poor (S&P) have all issued statements over the past week confirming that they are contemplating lowering the firm’s issuer rating, which current stands at Baa1, BBB+ and BBB+/A-2 respectively, due to concerns over the impact of the deal.

According to Moody’s, though the takeover may have a positive effect on Man’s overall value in the long term, the large amount of cash used to finance to deal has caused concerns over the firm’s liquidity.

Both Moody’s and Fitch have also voiced concerns over the uncertainties still surrounding the acquisition, such as shareholder and regulatory approval, while S&P has expressed similar worries, arguing that the potential negative impacts of the deal may not be “fully offset by the enhancements that GLG may bring to Man’s business profile and cash flow”.

Man has stated that the announcements were ‘not unexpectedly’, affirming its own belief that the merger would result in its credit being stronger, rather than weaker.

“We will continue to have a very healthy surplus of capital and we do not anticipate any material impact on relationships with counterparties,” the firm said in a statement.