Fitch might cut Marsh & McLennan

Fitch Ratings said it placed the ratings of Marsh & McLennan Cos., Inc. on rating watch negative, including the A long-term issuer default rating and senior unsecured debt ratings, and the F1 short-term ratings.

The agency said action follows the announcement that Marsh & McLennan has reached an agreement to acquire Jardine Lloyd Thompson Group plc. The total cash consideration equates to roughly $5.6 billion in fully diluted equity value, or an estimated enterprise value of $6.4 billion.

The transaction will be funded with cash on hand and proceeds from future debt financing.

Marsh & McLennan currently has bridge loan financing in place as required by the United Kingdom.

The rating watch negative reflects the expected increase in near-term debt and related increase to financial leverage as measured by debt to EBITDA, above levels acceptable for the current rating category, Fitch said.

Increased debt will also result in lower interest coverage, the agency noted.

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