Fitch Ratings on May 21 placed the BBB- long-term issuer default rating, senior secured debt rating and senior unsecured debt rating of Apollo Investment Corp. on Rating Watch Negative.
The A- ratings and positive outlook assigned to Apollo Global Management LLC, Apollo Investment's external manager, were unaffected.
Apollo Investment's move to Rating Watch Negative reflects the possibility of a downgrade after the company's decision to raise its leverage target amid "highly competitive" underwriting conditions, Fitch said. S&P Global Ratings cut the company's issuer credit rating in April.
The rating agency also believes that there is a degree of execution risk involved with Apollo Investment's portfolio mix shift, in which the company plans to rotate its portfolio over time into more first-lien securities and move away from second-lien investments, equity investments, legacy investments and its aircraft financing business.
Apollo Investment's BBB- ratings reflect its affiliation with the Apollo Global Management platform, which provides access to investment resources and deal flow, as well as the company's strong funding flexibility. The ratings are constrained by the company's outsized exposure to oil and gas investments, structured products and other equity positions, in addition to a meaningful concentration in aircraft financing.