TEXT-Fitch expects to rate Ares Capital convertible notes 'BBB'

Thu Oct 4, 2012 11:38am EDT

Oct 4 - Fitch Ratings expects to assign a rating of 'BBB' to Ares Capital
Corporation's (Ares) $200 million issuance of 4.75% unsecured
convertible notes. The notes will mature in January 2018.

Fitch does not believe there will be a material impact on the company's leverage
levels as a result of the issuance, as proceeds will largely be used to repay 
borrowings on secured credit facilities.

RATING DRIVERS AND SENSITIVITES

Ares currently has a Stable Rating Outlook, which reflects Fitch's expectation 
for continued consistency in core operating performance, and the maintenance of 
strong liquidity, relatively conservative balance sheet leverage, and solid cash
earnings coverage of the dividend.  

Negative rating actions would be driven by an extended increase in leverage 
above the targeted range, resulting from increased borrowings or material 
unrealized depreciation, and/or a meaningful increase in the proportion of 
equity holdings without a commensurate decline in leverage. A spike in 
non-accrual levels and weaker cash income dividend coverage would also be viewed
unfavorably from a ratings perspective.

Fitch believes the potential for positive rating actions is relatively limited 
at the present time, given significant market volatility, but positive rating 
momentum could develop from a continuation of demonstrated access to the debt 
and equity markets, to ensure adequate funding flexibility, and the deployment 
of capital into investments with attractive risk-adjusted return prospects, 
which yield consistent earnings growth, stable asset quality, and strong 
dividend coverage.   

Headquartered in New York, NY, Ares is an externally managed business 
development company, organized on April 16, 2004. As of June 30, 2012, the 
company had investments in 144 portfolio companies amounting to approximately 
$5.5 billion. 

Fitch expects to assign the following rating:

Ares Capital Corporation:

--$200 million unsecured convertible notes at 'BBB'.

Fitch currently rates Ares as follows:   

Ares Capital Corporation

--Long-term Issuer Default Rating (IDR) 'BBB';

--Senior secured debt 'BBB'; and

--Senior unsecured debt 'BBB'.

Allied Capital Corporation

--Senior unsecured debt 'BBB'.

The Rating Outlook is Stable.

Additional information is available at 'www.fitchratings.com'. The ratings above
were solicited by, or on behalf of, the issuer, and therefore, Fitch has been 
compensated for the provision of the ratings.

Applicable Criteria and
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