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Moody's affirms Virtus Investment Partners' ratings, changes outlook to stable

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Moody's affirms Virtus Investment Partners' ratings, changes outlook to stable

Moody's has affirmed the Ba2 corporate family rating and Ba2-PD probability of default rating of Virtus Investment Partners Inc. and revised the ratings' outlook to stable from positive.

Additionally, the rating agency has downgraded the company's senior secured credit facility to Ba2 from Ba1 and maintained the rating's stable outlook.

The actions follow Virtus Investment Partners announcement to refinance and upsize its existing term loan to fund the acquisition of Sustainable Growth Advisers LP.

The change in outlook reflects Moody's view that Virtus Investment Partners' flow profile is below its expectations and below certain similarly rated asset managers. Additionally, the rating agency believes that the acquisition will not sufficiently boost Virtus Investment Partners' credit profile to support a positive outlook. The rating agency acknowledged that Sustainable Growth Advisers has credit positive attributes but said the company does not meaningfully transform Virtus Investment Partners' scale or business diversification.

The ratings affirmation reflects Moody's view that the expected leverage increase from the transaction is within its tolerance for the company's Ba2 rating.