Standard & Poor’s assigned its ‘A’ senior unsecured debt rating to Blackstone Holdings Finance Co. LLC’s senior unsecured debt due March 15, 2021. The notes are fully and unconditionally guaranteed by Blackstone Group L.P. and Blackstone Partnerships. S&P said the rating is based on the pure asset-manager business model, stable recurring revenue streams, diverse businesses, a strong balance sheet, and a high level of transparency in the guarantor partnerships.
Standard & Poor’s Ratings Services said today that it assigned its ‘A’ senior unsecured debt rating to Blackstone Holdings Finance Co. L.L.C.’s senior unsecured debt maturing March 15, 2021. The notes issued by Blackstone Holdings Finance Co. L.L.C are fully and unconditionally guaranteed by Blackstone Group L.P. and Blackstone Partnerships: Blackstone Holdings I L.P., Blackstone Holdings II L.P., Blackstone Holdings III L.P., and Blackstone Holdings IV L.P. (collectively Blackstone Holdings; A/Stable/–).
The rating is based on the pure asset-manager business model, stable recurring revenue streams, diverse businesses, a strong balance sheet, and a high level of transparency in the guarantor partnerships. The Blackstone Group L.P. (NYSE: BX) is a listed public company, with sound governance practices.
Additional ratings support comes from the patient and conservative approach applied to all aspects of Blackstone’s businesses. Each of Blackstone’s businesses operates as a leading franchise in its respective markets. Business processes eliminate any unwanted or excessive risk-taking in any individual area.
We consider stability of the firm’s net fee-related earnings (NFRE) to be a primary ratings factor. NFRE reflects total management and advisory fees plus interest (excluding all performance and incentive fees), less all partner and employee compensation expense (excluding performance and incentive fee compensation), all other operating expenses, and cash taxes due.
We expect Blackstone to use the proceeds from the bond issuance for organic growth and potential acquisitions that could result in further strengthened earnings. We also expect any incremental earnings to more than cover additional interest expense resulting from the new debt, so that pro-forma EBITDA interest coverage (around 8x) and EBITDA debt coverage (around 2x) will remain sound. These coverage ratios are commensurate with the low volatility of Blackstone’s earnings.
RELATED CRITERIA AND RESEARCH
• Blackstone Holdings Finance Co. LLC Senior Unsecured Notes Rated ‘A’, Aug. 14, 2009
• Blackstone Holdings I, II, III, And IV L.P. Rated ‘A’; Outlook Stable, May 5, 2009
• Rating Private Equity Companies’ Debt And Counterparty Obligations, March 11, 2008
Counterparty Credit Rating A/Stable/–
Blackstone Holdings Finance Co. L.L.C.
5.875% Sr. Notes Due March 15, 2021 A
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Jeff Sexton, New York, (1) 212-438-3448
Chris C Cary, New York (1) 212-438-1894
Jeffrey Zaun, New York (1) 212-438-2739