Moody's Investors Service slashed Man Group's credit rating to just above junk after the hedge fund giant's assets under management dropped by a quarter over the past year.
The world's largest publicly-traded hedge fund's debt is now rated Baa3, the lowest investment grade, Moody's announced today. The ratings agency cited "continuing challenges in the company's core business" and warned "there will be little if any retained earnings given Man's dividend policy and ongoing earnings pressure."
Man disputed Moody's pessimism, saying it "remains financially robust and enjoys a strong position in the market."
"Man has made considerable progress in addressing its cost base and expanding its investment management capabilities," it said.
Man's assets dropped from US$71 billion to US$52.7 billion in the year-ended June. Its stock price has been battered and its flagship AHL strategy has performed poorly. The firm announced plans to impose nearly US$200 million in cost cuts this year.