Moody’s Investors Service downgraded Nuveen Investments today due to an anticipated revenue decline stemming from reduction in its assets under management because of the equity market drop.
Nuveen’s corporate family rating dropped to B2 from B1, its senior secured bank facility rating to B1 from Ba3, and its senior unsecured notes was dropped to Caa1 from B3.
The rating service said it also is placing Nuveen on review for further downgrade.
“Nuveen’s earnings will likely lead to a material elevation in the company’s already high leverage and possibly a breach of a financial covenant in the company’s bank facility in 2009,” a news release from Moody’s said. The release noted that Nuveen’s revenue and operating earnings are expected to decline by more than 20% in 2009.
Nuveen was upgraded from negative to stable on Feb. 29.
Nuveen spokeswoman Kathleen Cardoza said that given current market conditions facing money management firms, the company is not surprised by the downgrade and understands “the concern over the challenges facing the financial services industry.”
“Our liquidity remains strong, with nearly $300 million in cash at the end of the third quarter,” Ms. Cardoza said, adding that Nuveen continues to generate strong operating cash flow. “We have prudently adjusted and will continue to monitor our operating costs. We will maintain a level more in line with the reduced revenue from our lower amount of assets under management.”
The company had $134 billion in assets under management as of Sept. 30.
The downgrade is part of an ongoing examination of money management firms, the release said.
