Research Update: Aretec Group Inc. 'B-' Rating Affirmed On Acquisition Of Voya Financial Advisors' Assets; Outlook Remains Stable

Aretec Group is acquiring certain assets related to the independent financing channel of Voya Financial Advisors from Voya Financial Inc. (announced in February 2021) through a combination of incremental first-lien term loan, senior unsecured debt, and cash on hand. We believe the credit metrics are still commensurate for the rating, with pro forma leverage (as measured by debt to covenant EBITDA) of 5.75x-6.25x, a modest deterioration from our previous expectation of 5.5x-6.0x. As a result, we affirmed our 'B-' issuer credit and first-lien term loan ratings on Aretec Group. We also assigned a 'B-' issue rating to the first-lien term loan add-on. The stable outlook reflects our view that over the next 12 months Aretec Group will continue to improve

...- Aretec Group is acquiring certain assets related to the independent financing channel of Voya Financial Advisors from Voya Financial Inc. (announced in February 2021) through a combination of incremental first-lien term loan, senior unsecured debt, and cash on hand. - We believe the credit metrics are still commensurate for the rating, with pro forma leverage (as measured by debt to covenant EBITDA) of 5.75x-6.25x, a modest deterioration from our previous expectation of 5.5x-6.0x. - As a result, we affirmed our 'B-' issuer credit and first-lien term loan ratings on Aretec Group. We also assigned a 'B-' issue rating to the first-lien term loan add-on. - The stable outlook reflects our view that over the next 12 months Aretec Group will continue to improve earnings and leverage. We also expect the company will maintain sufficient liquidity and a comfortable cushion relative to the springing leverage covenant on its revolving credit facility....

Research Update