S&P downgrades Och-Ziff

S&P said it lowered the issuer credit ratings to BB- from BB on Och-Ziff Capital Management Group LLC, OZ Management LP, OZ Advisors LP and OZ Advisors II LP.

These three partnerships are referred to as the operating group.

The agency also downgraded Och-Ziff Finance Co. LLC to BB- from BB.

The outlook is negative.

S&P also said it lowered the senior unsecured debt ratings to BB- from BB. The recovery rating of 4 is unchanged and the recovery prospects were revised to 40% from 45%.

The downgrades reflect the company's continued asset outflows and further decline in average management fee rate, the agency said.

Och-Ziff said it expects that base salaries and benefits will be between $100 million and $105 million and non-compensation expenses, including interest expense, will be between $140 million and $155 million in 2017.

The company also indicated that a minimum amount of the discretionary cash bonus between $18 million and $20 million per quarter will be accrued, S&P said.

The agency also said it now believes the minimum amount of bonus accrual is not as discretionary as initially projected and should be considered as more of a fixed than a variable cost, which typically gets paid when the company incurs substantial amount of incentive fees.

Considering these factors, S&P said it expects the weighted debt-to-EBITDA ratio will be between 4x to 5x versus a previous forecast of 3x to 4x.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.