June 12, 2009 / 3:19 PM / 10 years ago

S&P cuts Blackrock ratings by one notch after BGI deal

NEW YORK, June 12 (Reuters) - Standard & Poor’s on Friday lowered BlackRock Inc’s (BLK.N) debt ratings by one notch after the largest publicly traded U.S. money manager agreed to buy Barclays Global Investors.

The $13.5 billion deal to buy British bank Barclays Plc’s (BARC.L) investment arm BGI was announced on Thursday and would create the world’s biggest asset manager. The deal also would add about $3 billion of debt to BlackRock’s balance sheet to finance the sale.

S&P cut Blackrock’s long-term ratings by one notch to A-plus, the fifth highest rating, from AA-minus, and its short-term ratings to A-1, the second highest rating. The rating company also holds a negative outlook, suggesting the possibility of further cuts.

“We believe the overall debt burden is moderate, but initial credit metrics for the combined organization place BlackRock into the ‘A’ rating category rather than the ‘AA’ category,” S&P said in a statement.

BlackRock will initially rely on $3 billion of short-term debt to finance part of the deal, “which introduces some refinancing risk,” S&P said. (Reporting by Walden Siew; Editing by Theodore d’Afflisio)

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