Osaic Holdings Inc.

The stable outlook reflects our expectation that Osaic's S&P Global Ratings-adjusted debt to EBITDA ratio will remain around 5.5x and debt service coverage just over 2x, even as the company's aggressive financial management and private-equity ownership constrain our view on capitalization and the rating. Over the next 12 months, we could lower the rating if we expect Osaic's interest coverage to worsen, or if we expect S&P Global Ratings-adjusted debt-to-EBITDA to substantially increase above 6.0x. An upgrade is unlikely in the next 12 months because of the private-equity ownership. Over the longer term, we could upgrade Osaic if we expect it to sustain leverage across interest rate and market cycles well below 4.0x because of a demonstrated commitment to a

...Osaic Group Holdings Inc. ratings are constrained by its private-equity ownership and aggressive financial management. This entails an acquisitive growth strategy, a high debt burden, our expectation of gross debt to S&P Global Ratings-adjusted EBITDA of approximately 5.4x as of first-quarter 2024, modest debt service coverage just above 2.0x, and negative tangible equity. Osaic has a solid business as one of the largest independent brokers in the U.S. While Osaic is much smaller than the largest retail brokerage and investment management companies (such as Charles Schwab or Morgan Stanley), it is the third-largest independent brokerage firm (behind LPL and Ameriprise). Pro forma for the recently closed Lincoln Wealth acquisition, it has approximately $676 billion in total client assets and around 11,300 financial advisers (FAs). Osaic has limited credit and market risk exposure and appetite. This is because the firm does not hold securities and does not self-clear for its business segments....

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