CHICAGO - (Business Wire) Fitch's recent rating affirmation of American Capital Strategies LLC (Nasdaq:ACAS) prospectively incorporated the occurrence of realized/unrealized losses in investment portfolio over the near to intermediate term. Fitch recognizes that the magnitude of the overall $997 million unrealized loss reported for the first quarter ended March 31, 2008 was substantial.
Despite the substantial unrealized losses, Fitch notes that underlying performance of the investment portfolio and the company remains fundamentally solid. Fitch continues to believe that ACAS' leverage, liquidity and capitalization continue to support the current ratings and Outlook.
Fitch expects the overall investment portfolio will continue to perform well and that any deterioration in underlying credit quality will not exceed historical norms. Although further unrealized losses may continue to occur over the near to intermediate term, Fitch does not anticipate that these losses will approach the magnitude recognized in the first quarter of 2008. Recognition of further losses that materially erode ACAS' current liquidity and capitalization and pressure the company's ability to maintain leverage below 1.0 times (x) would generate downward pressure on current ratings.
Fitch currently rates American Capital Strategies as follows:
--Issuer Default Rating (IDR) 'BBB';
--Senior Unsecured debt 'BBB'.
The Rating Outlook is Stable.
ACAS is a publicly traded business development company that provides investment capital in the form of senior and subordinated debt and equity to middle market companies. At Dec. 31, 2007, ACAS reported total assets under management of $17 billion at fair value, which included total owned investments of $11.7 billion.
Fitch's rating definitions and the terms of use of such ratings are available on the agency's public site, www.fitchratings.com. Published ratings, criteria and methodologies are available from this site, at all times. Fitch's code of conduct, confidentiality, conflicts of interest, affiliate firewall, compliance and other relevant policies and procedures are also available from the 'Code of Conduct' section of this site.
Fitch Ratings
William Artz, 312-368-3178 (Chicago)
Meghan Crowe, CFA, 212-908-9121 (New York)
Kenneth Reed, 212-908-0540
(Media Relations, New York)
