Standard & Poor's Rating Services on Friday lowered its issuer credit ratings on AllianceBernstein on the back of continued net outflows, even as the ratings agency confirmed the firm's financial risk profile remains sound.
S&P lowered its long-term issuer credit rating on AllianceBernstein to A+ from AA-, and its short-term issuer credit rating to A-1 from A-1+.
Chris Cary, an S&P credit analyst, said in a news release that the move reflects “our opinion that sustained net asset outflows” — part of why assets under management dropped by roughly half during the past 41/2 years to $400 billion as of May 31 — “have reduced the company's fee base and profitability.
The release cited continued underperformance for AllianceBernstein's large-cap equity offerings as a factor behind S&P's decision to keep its ratings outlook negative.
At the same time, S&P noted AllianceBernstein had positive tangible equity of $1 billion as of March 31, “which we consider among the strongest in the industry,” in addition to “a solid liquidity cushion and backup credit lines.”
Reached by telephone, AllianceBernstein spokesman John Meyers noted the firm has “zero long-term debt, finished the first quarter with $437 million in cash on our balance sheet, (remains) a profitable company with strong cash flow and, importantly, has had several months of positive net retail inflows, as well as seeing recent moderation of net institutional outflows.”