The Carlyle Group Inc.

The stable rating outlook reflects our expectation that over the next two years, the company will maintain leverage near or modestly below 1.5x and continue to grow its fee-related earnings, even as its more volatile performance allocations are likely to fall from the very high level of 2021. We could lower the rating if the company's leverage rises closer to or above 2.0x on a sustained basis. That could occur if the company uses debt or a significant portion of its surplus cash for acquisitions--particularly if we don't expect those acquisitions to support robust and stable EBITDA growth--if it adopts a more aggressive financial policy in general, or if its fee-related earnings unexpectedly fall materially. We are unlikely to raise

...Carlyle has significantly grown and diversified its assets under management (AUM) and its fee-related earnings in recent years. The company has increased its fee-earning assets under management (FEAUM) by more than 60% since year-end 2019, supporting strong recurring EBITDA growth. Carlyle has shown particular strength in growing its global credit business, which is now almost as large as its long-standing private equity business, mostly through a combination of fundraising and acquisitions. That business has reduced its reliance on the carried interest it realizes when it sells investments held in funds it manages. Its investment in and relationship with Fortitude, a Bermuda reinsurer, have also helped propel its overall growth. Leverage has fallen with increased EBITDA and reduced debt, and the company appears committed to operating with low leverage. We expect the company's debt to EBITDA--measured on an adjusted three-year weighted average basis--to be modestly below or at the lower...

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