The people who run the Man Group certainly think their deal for GLG Partners is a good idea. The people who run the ratings agencies are a good deal less certain.
The world’s largest publicly-listed hedge fund manager’s bid to become the world’s largest hedge fund manager has gotten the cold shoulder from both Moody’s Investor Services and Standard & Poor’s. Both took a step towards downgrading Man’s shares in the wake of its $1.6 billion takeover of GLG, citing concerns about the cash aspect of the deal and GLG’s financial health.
“The CreditWatch placement reflects our view that the acquisition of GLG may lead to an overall weakening in Man’s credit profile, due to reduced liquidity and capitalization not being fully offset by the enhancements that GLG may bring to Man’s business profile and cash flow,” S&P’s Nigel Greenwood.
S&P said it might cut Man’s triple-B-plus/A-2 credit rating “by one or two notches.” Moody’s awarded Man, which it rates at Baa1, a negative outlook.
“We believe that our credit will, in fact, be stronger, rather than weaker, as a result of the proposed acquisition,” Man shot back in a statement. “We will continue to have a very healthy surplus of capital and we do not anticipate any material impact on relationship with counterparties.”