S&P may drop MSCI

Standard & Poor's said it placed the BB corporate credit rating on MSCI Inc. on CreditWatch with negative implications.

This action follows news that the company agreed to acquire RiskMetrics Group Holdings LLC, which is rated BB- with stable view for a combination of debt and stock totaling about $1.6 billion.

While the agency said it believes the combination of the these two companies will improve MSCI's scale and product mix through increased diversity and a higher recurring revenue percentage, the transaction also will increase overall leverage given the significant expected debt component.

Depending on MSCI's post-transaction financial policy and growth strategy, a potential downgrade is most likely to be limited to one notch on the corporate credit rating, the agency said.

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