Ares Management Corp.

The stable outlook on Ares reflects S&P Global Ratings' expectation that the company will maintain good investment performance and solid growth in fee-paying assets under management (FPAUM) in 2019 and 2020. It also reflects our expectation that the company will maintain leverage between 1.5x and 2.0x over the same period. We could downgrade Ares if leverage increases above 2.0x on a sustained basis. We could also downgrade the company if we observe material deterioration in the company's investment performance such that we think its ability to raise funds and maintain its earnings power has diminished. We could upgrade Ares if we expect the company to maintain leverage below 1.5x on a sustained basis. An upgrade based solely on improvement in

...The trajectory for Ares' business remains very favorable.The company has built up $23.8 billion in capital not yet earning fees that is available for future deployment. This should fuel meaningful management fee growth as it is deployed over the next few years. At the same time, we expect the company to continue to have solid fundraising results during the remainder of 2019 and 2020. Leverage remains relatively low, but spikes above 2x raise concern about the company's commitment. Ares' relatively low leverage remains supportive of its investment-grade rating. However, more recently, there have been periods of fluctuation up to and slightly above our trigger for a downgrade, stretching our tolerances for the current '###+' rating. While our current expectations are for Ares to maintain leverage of 1.5x to 2.0x in 2019 and 2020, any sustained deviation above this range will likely pressure the rating....

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