Fitch Cuts Allied Capital's Issuer-default Rating

NEW YORK (AP) — Fitch Ratings cut its issuer-default rating on Allied Capital Corp. Tuesday after the firm announced it had completed the restructuring of outstanding private debt and a bank credit facility.

The credit ratings agency said it cut the key rating to "B+" from "BB" because of the costs associated with restructuring the debt, including expected asset sales to meet new debt maturities and higher funding costs.

The two-notch downgrade moves Allied Capital's debt rating further into "junk" status.

Fitch also cut Allied Capital's senior unsecured debt rating to "B+" from "BB." It maintained its "BB" rating on its senior secured debt.

Allied Capital, which provides financing for buyouts, acquisitions and other business transactions, had been in default on the debt and credit line. The debt restructuring alters Allied Capital's covenants, providing it with more financial flexibility.

However, by restructuring the debt, Allied Capital said its funding costs will increase. It will also record a charge during the third quarter of about $116 million tied to the debt restructuring.