Aretec Group Inc. 'B' Ratings Affirmed And Removed From CreditWatch Negative On Avantax Acquisition; Outlook Stable

Aretec Group is issuing an incremental first-lien term loan and senior secured notes to fund its previously announced acquisition of Avantax and refinance the existing first-lien term loan due 2025. While the additional debt increases leverage and lowers debt service coverage, we expect these credit metrics to remain within our tolerances for the rating because of the benefit of higher-for-longer interest rates, the firm's ability to realize synergies on the acquisition, and hedges that limit the impact of declining rates on sweep revenue. We affirmed our ratings on Aretec, including our 'B' issuer credit rating, and removed them from CreditWatch negative. We also assigned a 'B' rating to the new revolving credit facility, incremental first-lien term loan, and new senior

...October 16, 2023 - Aretec Group is issuing an incremental first-lien term loan and senior secured notes to fund its previously announced acquisition of Avantax and refinance the existing first-lien term loan due 2025. - While the additional debt increases leverage and lowers debt service coverage, we expect these credit metrics to remain within our tolerances for the rating because of the benefit of higher-for-longer interest rates, the firm's ability to realize synergies on the acquisition, and hedges that limit the impact of declining rates on sweep revenue. - We affirmed our ratings on Aretec, including our 'B' issuer credit rating, and removed them from CreditWatch negative. We also assigned a 'B' rating to the new revolving credit facility, incremental first-lien term loan, and new senior secured notes. - The stable outlook reflects our expectation that Aretec will fairly quickly realize most of its planned expense synergies, which will support maintaining its S&P Global Ratings-adjusted...

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