TEXT - Fitch rates Jefferies Group senior notes 'BBB'

Wed Jan 16, 2013 5:08pm EST

Jan 16 - Fitch Ratings has assigned 'BBB' ratings to Jefferies Group, Inc.'s
 (Jefferies) $600 million 5.125% senior unsecured notes due 2023 and $400
million 6.5% senior unsecured notes due 2043. The notes have been placed on
Rating Watch Negative, consistent with Jefferies' Long-Term Issuer Default
Rating. The proposed notes have been issued under Jefferies' shelf registration.

The $1 billion issuance will marginally increase Jefferies' pro forma leverage, 
according to Fitch's estimates. Fitch believes this transaction will have a 
relatively modest impact on the firm's credit profile. The proposed notes have 
significantly longer maturities than Jefferies' outstanding unsecured notes, and
therefore have a positive impact on the company's debt maturity profile. 

Approximately $250 million of the proceeds from the dual-tranche offering will 
be used to pre-fund Jefferies' 5.875% senior notes due 2014 and approximately 
$350 million of the proceeds to fund the required redemption of two series of 
outstanding non-controlling membership interests in Jefferies High Yield 
Holdings, LLC. The remaining $400 million will be used for general corporate 
purposes. 

RATING DRIVERS AND SENSITIVITIES

Jefferies' ratings were placed on Rating Watch Negative on Nov. 12, 2012 in 
connection with the company's planned merger with Leucadia National Corp. 
(Leucadia). Fitch expects to downgrade Jefferies' ratings by one notch upon 
consummation of the merger. This reflects Fitch's view that after the proposed 
merger, Jefferies would become much more exposed to the market risk inherent in 
the other subsidiaries' investments at Leucadia. Conversely, becoming a 
privately-owned company may help insulate Jefferies from external market 
pressures similar to those experienced in November 2011 For more information, 
please see the press release titled 'Fitch Places Jefferies' 'BBB' L-T IDR on 
Rating Watch Negative on Proposed Merger with Leucadia,' available at 
www.fitchratings.com. 

Jefferies, a Delaware-incorporated holding company, is a well-established 
full-service investment bank and institutional securities firm primarily serving
middle-market clients and investors. Its primary broker/dealer operating 
subsidiary, Jefferies & Company, Inc., holds the vast majority of the firm's 
consolidated assets and is regulated by the SEC. At Nov. 30, 2012, Jefferies had
U.S. GAAP total assets of $36.3 billion and shareholders' equity of $3.4 billion
(including non-controlling interests).

Fitch has assigned the following ratings:

Jefferies Group, Inc.

--$600 million 5.125% senior unsecured notes due 2023 'BBB'; Rating Watch 
Negative;

--$400 million 6.5% senior unsecured notes due 2043 'BBB'; Rating Watch 
Negative.