Research Update: Apollo Global Management LLC Outlook Revised To Negative On Proposed Senior Debt Issuance; New Notes Rated 'A'

Apollo Management Holdings L.P. (an indirect subsidiary of Apollo Global Management LLC) is issuing 10-year senior unsecured notes. It will initially keep proceeds in a custody account, but it can draw upon them at any time. Even though proceeds will offset the debt initially, we view the debt issuance as a credit negative given our expectation that the company will eventually use the proceeds, likely leading to a deterioration in leverage and interest coverage versus our previous expectations. We are revising our outlook on Apollo to negative from stable and affirming our 'A' issuer credit and senior unsecured debt ratings and our 'BBB+' preferred unit rating. We are also assigning our 'A' rating on the new senior unsecured notes. The

...+ Apollo Management Holdings L.P. (an indirect subsidiary of Apollo Global Management LLC) is issuing 10-year senior unsecured notes. It will initially keep proceeds in a custody account, but it can draw upon them at any time. + Even though proceeds will offset the debt initially, we view the debt issuance as a credit negative given our expectation that the company will eventually use the proceeds, likely leading to a deterioration in leverage and interest coverage versus our previous expectations. + We are revising our outlook on Apollo to negative from stable and affirming our 'A' issuer credit and senior unsecured debt ratings and our '###+' preferred unit rating. We are also assigning our 'A' rating on the new senior unsecured notes. + The negative outlook on Apollo incorporates our expectation that the company could draw on the contingent liquidity over our ratings outlook horizon, such that leverage and coverage metrics are likely to move closer to, or surpass, our 1.5x and 10x downside...

Research Update