Fitch puts Jefferies on positive watch

Fitch Ratings said it placed the BB- long-term issuer default ratings of Jefferies Finance LLC and its debt co-issuing subsidiary, JFIN Co-Issuer Corp., on Rating Watch positive.

The agency also said it affirmed the existing senior secured debt rating at BB and the existing senior unsecured debt rating at BB-.

These actions follow Jefferies' announced refinancing transaction, which includes issuing a new $700 million senior secured term loan due 2026, anticipated issuance of senior secured notes and an agreement for a new $275 million three-year priority revolving credit facility.

The proceeds will be used from the offerings and cash on hand to repay its existing senior secured term loan and three of its four outstanding senior unsecured notes issuances, Fitch said.

The agency said it expects to resolve the Rating Watch positive upon execution of the planned debt issuances and the repayment of existing debt, which is expected to occur in June.

Fitch also said it assigned expected ratings of BB+ to Jefferies and JFIN Co-Issuers senior secured priority revolving credit facility, expected BB rating on its senior secured term loan and BB on its senior secured notes.

The positive watch reflects an expectation for continued improvement in leverage levels, as debt-to-tangible equity would decline to 4.4x – pro forma for the refinancing transactions – down from 4.8x as of February 2019, the agency said.

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