Ares Management Corp.

The stable outlook on Ares reflects S&P Global Ratings' expectation that the company will maintain good investment performance despite increased volatility in markets, solid growth in fee-paying assets under management (FPAUM), and leverage between 1.5x and 2.0x during the next 18 to 24 months. 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 comfortably below 1.5x. An upgrade based solely on improvement in the company's scale and diversification is unlikely over the

...Ares continues to exhibit good AUM growth. Ares Management Corp.'s AUM reached $149 billion at the end of the first quarter of 2020 compared with $137 billion a year before, driven primarily by strong fundraising and capital deployment. Locked-up AUM provides significant visibility for future cash flow generation. At the end of March 31, 2020, almost 70% of Ares' AUM was in funds with three or more years left and 13% was in permanent capital vehicles. Increased volatility could result in lower performance fees. A meaningful portion of Ares' earnings are derived from performance fees, which could decline due to increased volatility amid the COVID-19 outbreak....

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