Bulletin: Ares Management's Business Momentum Continues, But Leverage Is A Concern

NEW YORK (S&P Global Ratings) Feb. 15, 2019--Ares Management's leverage once again rose above our downside threshold of 2x debt to adjusted EBITDA at year-end 2018 (it was approximately 2.2x at year-end 2018 and 2.3x at year-end 2017) driven by a $130 million incremental draw on the firm's revolving credit facility in the fourth quarter. While this increase is likely temporary, given Ares pays bonuses in the fourth quarter and business trends remain favorable, continued moves above 2x begin to eat away at our confidence around the company's intent to stay within our tolerances for the 'BBB+' rating. Accordingly, if Ares doesn't quickly lower leverage below 2x, whether through EBITDA growth or debt repayment, there could be downside pressure on

...NEW YORK (S&P Global Ratings) Feb. 15, 2019--Ares Management's leverage once again rose above our downside threshold of 2x debt to adjusted EBITDA at year-end 2018 (it was approximately 2.2x at year-end 2018 and 2.3x at year-end 2017) driven by a $130 million incremental draw on the firm's revolving credit facility in the fourth quarter. While this increase is likely temporary, given Ares pays bonuses in the fourth quarter and business trends remain favorable, continued moves above 2x begin to eat away at our confidence around the company's intent to stay within our tolerances for the '###+' rating. Accordingly, if Ares doesn't quickly lower leverage below 2x, whether through EBITDA growth or debt repayment, there could be downside pressure on the rating. Despite higher-than-expected leverage metrics at year end, business momentum continues to be strong at Ares. Fee-paying assets under management (FPAUM) in 2018 grew by 12.9%, buoyed by strong fundraising and capital deployment. Notably,...

Bulletin