Jefferies Finance LLC

We rate JFIN's senior unsecured notes 'B+', one notch below the issuer credit rating. We expect priority debt (RCF, TLB, and senior secured notes) to remain well above 30% of adjusted assets--at about 50%--and unencumbered assets to unsecured debt to be 1.0x-1.2x. If the company's priority debt remains above 30% of adjusted assets and if unencumbered assets to unsecured debt falls below 1.0x, we would lower the unsecured debt rating by another notch to 'B'. The stable outlook reflects JFIN's improved operating performance and reduced asset quality risk. In the next 12 months, we expect the company to operate with leverage--as measured by debt to adjusted total equity (ATE)--between 2.75x and 4.5x, and to maintain adequate liquidity relative to its

...S&P Global Ratings expects Jefferies Finance LLC (JFIN)'s operating performance to remain steady and asset quality strain manageable. The recovery of the syndicated leveraged loan market has led to increased transaction activity for JFIN. As a result, for the nine months ended Aug. 31, 2024, net fee income increased 56.8% to $176.9 million from the same period in the prior year. While JFIN has loan exposure to Forma Brands LLC (Forma), we think the steps that Forma has taken to improve its performance have reduced the odds of a significant additional loss on the loan for JFIN. We expect JFIN to maintain leverage of 2.75x-4.50x. In October 2024, the company refinanced its capital structure by paying off $1.65 billion in revolving credit facility (RCF) and $250 million of subordinated notes through the issuance of a new $500 million priority RCF, a $950 million senior secured term loan B (TLB) due 2031, and $500 million of senior secured notes due 2031. Pro forma these transactions, we expect...

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