(The following statement was released by the rating agency)
NEW YORK, September 05 (Fitch) Fitch Ratings has assigned 'BBB'
Brookfield Asset Management Inc.'s (BAM) C$425 million aggregate
amount of debt debt securities consisting of C$300 million of
Medium Term Notes
due March 2024 and C$125 million of 5.95% debentures due June
The Rating Outlook is Stable.
Debt proceeds will be used to repay obligations. In August 2013,
a settlement to terminate two related 25-year swap agreements
for a lump sum
payment of $905 million to the counterparty.
Key Positive Rating Drivers
--Diversified and stable revenue sources from a global
--Underlying commercial real estate and power generation assets
cash flow producing enhancing liquidity;
--Enhanced financial flexibility from holding company structure
subsidiaries publicly-listed and maintaining direct access to
Key Negative Rating Drivers
--Structural subordination of BAM's cash flows to debt at the
project level or
--High degree of leverage at the operating entities;
--Opportunistic value oriented investment strategy can alter the
BAM is a holding company that through majority-owned or
subsidiaries owns a diversified business portfolio, principally
estate and power generation assets, which provide a stable
stream of earnings
and cash flows. BAM also derives a stable and recurring revenue
stream from its
asset management business.
BAM's credit profile is supported by the equity values of BAM's
the largest of which are publicly traded, as well as substantial
distributions from its subsidiaries and investments which are
the real estate and power generation sectors. The largest
investments, Brookfield Property Partners, Brookfield
and Brookfield Renewable Energy provide substantial interest and
to BAM's outstanding parent-level debt.
In April 2013, BAM completed the restructuring of its commercial
holdings through the creation of Brookfield Property Partners
which now owns
substantially all of BAM's commercial real estate properties and
in General Growth Properties and Brookfield Office.
As a holding company with a portfolio of investments, rather
than an operating
company, Fitch analyzes recurring cash flows that directly
accrue to BAM in the
form of dividends, distributions, and asset management fees of
against parent level debt. The resulting Adjusted Parent Only
Cash Flow (APOCF,
a non-GAAP or non-International Financial Reporting Standards
approximates $1.1 billion and produces a debt service coverage
approximately 4.5x in Fitch's models. APOCF to parent level debt
24%. As recent investments mature, Fitch expects coverage
measures to improve to
between 4.5x and 5.0x through 2015 and leverage to improve
slightly to between
25% to 27%.
Liquidity is strong. BAM maintains $2.2 billion in unsecured
with a consortium of banks and debt maturities are manageable.
considerable liquidity and financial flexibility from its
and diversified investments.
The holding company structure, with its primary assets held in
majority-owned publicly listed companies, enhances BAM's
in managing the capital structures of its operating subsidiaries
subordinates its cash flow, which will now be primarily derived
and distributions. BAM also receives management fees based on
of its core operating subsidiaries, which Fitch considers a
stable source of
income as well as performance-based incentive distributions.
The holding company structure also protects BAM from the legal
risks of its
subsidiaries and parental guarantees or other contingent
supports are limited.
Additionally, there are no cross default provisions between
between the parent and subsidiaries.
Positive: No positive rating actions are currently foreseen.
Negative: Future developments that may individually or
collectively lead to a
negative rating action include:
--A change in the risk profile of BAM's real estate and power
assets which are
generally considered to be of very quality;
--A large debt financed acquisition.
Fitch Ratings, Inc.
One State Street Plaza
New York NY 1004
Media Relations: Sandro Scenga, New York, Tel: +1 212-908-0278,
Additional information is available at 'www.fitchratings.com'.
Applicable Criteria and Related Research:
--Corporate Rating Methodology, Aug. 8, 2012;
--Parent and Subsidiary Linkage, August 8, 2012;
--Criteria For Rating U.S. Equity REITs and REOCs, Feb. 26,
--Investment Manager and Alternative Funds Criteria, Dec. 17,
Applicable Criteria and Related Research:
Corporate Rating Methodology: Including Short-Term Ratings and
Criteria for Rating U.S. Equity REITs and REOCs
Investment Manager and Alternative Funds Criteria
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