Fortress Investment Group on Feb. 24 was given an initial long-term counterparty credit rating of BBB-, with a stable outlook by Standard & Poor's and Fitch Ratings.
It's the first rating from either firm for Fortress, which went public in February 2007.
Both rating agencies pointed out Fortress' recurring management fee income, particularly from its private equity and hybrid funds. S&P also expects Fortress to grow modestly and to diversify its revenue streams. Fitch cited Fortress' “solid reputation in the alternative asset manager industry.”
S&P cited the illiquidity of Fortress' assets and the funds' high exposure to credit and real estate cycles as weaknesses that could affect the firm's performance. Fitch mentioned that Fortress is susceptible to clawbacks, changes in investor risk tolerance and regulatory changes. Fortress had significant redemption requests across many funds in 2008; it restructured its Global Macro Fund to prevent asset sales at distressed prices.
Lilly H. Donohue, Fortress spokeswoman, could not be reached by press time.