Citadel Limited Partnership

The stable outlook indicates S&P Global Ratings' view that Citadel will generate strong adjusted EBITDA margins above 80% (net of expense reimbursements), leverage below 2.0x as measured by debt to adjusted EBITDA, and interest coverage of 9.0x-13.0x in the next 18-24 months. The stable outlook also reflects our expectation that Citadel will maintain or modestly build its assets under management (AUM) and keep up its solid investment performance. We could lower the rating if earnings decline so that leverage increases to 2.0x or more on a sustained basis, if investment performance or profitability seriously deteriorates, or if Citadel experiences large net outflows beyond distributions in the ordinary course of business. While it is unlikely, we could raise the rating if

...We anticipate Citadel Limited Partnership's enhanced fee structure will somewhat stabilize earnings, but dependence on performance fees may still lead to volatility. As of Jan. 1, 2022, approximately 88% of Citadel's investment capital had transitioned to the enhanced management fee structure: a 1% management fee credited against any performance fees for the year, in addition to expense reimbursements applicable to all funds. This should bring more stability and transparency to future earnings, but a majority of the company's revenue still derives from performance fees, which can be volatile. The company's sizable internal capital aligns the interests of Citadel principals and employees and external investors. As of Jan. 1, internal capital from Citadel principals and employees constituted more than $9 billion (over 20%) of investment capital. The interests of internal and external stakeholders are therefore strongly aligned because they are subject to the same fee structure. Citadel maintains...

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