OREANDA-NEWS. Fitch Ratings has assigned Intermediate Capital Group's (ICG; BBB-/Stable) proposed bullet bond issue under its GBP500m euro medium-term note (EMTN) programme an expected rating of 'BBB-(EXP)'.

The final rating is contingent on the receipt of final documentation conforming to information already received.

KEY RATING DRIVERS
Notes issued under the EMTN programme are expected to be rated in line with ICG's Long-term IDR of 'BBB-', reflecting their status as senior unsecured obligations. The proposed notes will be guaranteed by Intermediate Capital Investments Limited, Intermediate Capital Managers Limited and Intermediate Investments LLP, which together account for a material portion of group assets and earnings. In common with ICG's Long-term IDR the expected issue rating reflects Fitch's view of ICG holding a strong franchise in leveraged finance and associated asset management activities.

The rating also takes into account the inherent risk profile of the group's asset portfolio and its links with wider market performance, notwithstanding recent increases in the scale of ICG's fund management activity, which Fitch views are comparatively stable, relative to its level of direct investment.

RATING SENSITIVITIES
As the rating is aligned with ICG's IDR, it is primarily sensitive to a change in the IDR.

In this light the ratings may be downgraded if ICG's leverage, defined as debt/tangible equity, exceeds 1.0x (September 2014: 0.4x) on a sustained basis, if it reports a material fall in fund management fees or if it suffers a significant weakening of performance in its asset portfolio.

Upside rating potential is currently limited, but the rating could benefit over time from further rebalancing of the earnings profile towards more stable fund management company fee income, with evidence of a related reduction in balance sheet risk.