OREANDA-NEWS. Fitch Ratings has affirmed Aberdeen Asset Management Plc's (AAM) Long-term Issuer Default Rating (IDR) at 'A' and Short-term IDR at 'F1'. The Outlook on the Long-term IDR is Stable. Its subordinated perpetual cumulative notes are affirmed at 'BBB'

These actions have been taken by Fitch in conjunction with a broader traditional investment manager industry review. For more commentary on the broader sector review, see 'Fitch Completes Traditional Investment Manager Review; Upgrades AMG and Man; Revises Invesco to Positive', published today and available at 'www.fitchratings.com'.

KEY RATING DRIVERS

IDRS AND SENIOR DEBT
The IDRs affirmation reflects AAM's strong profitability, increased product and geographical diversification, adequate capitalisation and low leverage, as well as its profile and track record as a traditional asset manager. The ratings also factor in the sluggish performance of some asset classes compared with benchmarks, the moderately negative trend in net assets under management (AuM) flows following challenging market dynamics and its effect on earnings and bottom-line profitability, as well as operational and reputational risks, which are common to the business model.

The integration of SWIP in 2014 has reinforced the group's ability and track record in successfully integrating its acquisitions. AAM now benefits from a higher AuM base, as well from enhanced earnings generation and bottom-line profitability following the implementation of cost efficiency measures, while SWIP's focus on the UK and developed markets helps mitigate the group's concentrations on certain regions and asset classes. Capitalisation remains adequate for the group's risk profile, and leverage is low with a tangible equity-to-tangible assets ratio of 8.7% and negative net debt levels.

The ratings also take into account pressures of a changing product mix and of tighter margins in the acquired business, which may weaken the group's margins and efficiency metrics in the short-term. Further, challenging asset performance in certain regions that could undermine net AuM flows could also act as a negative rating driver.

SUBORDINATED DEBT AND OTHER HYBRID SECURITIES
AAM's USD500m perpetual cumulative subordinated instruments receive 50% equity credit and are rated three notches below the group's IDR, in accordance with Fitch's criteria for the "Treatment and Notching of Hybrids in Nonfinancial Corporate and REIT Credit Analysis" dated 24 November 2014. A hybrid instrument with easily activated going-concern loss absorption would normally be rated at least three notches lower than the issuer's Long-term IDR.

RATING SENSITIVITIES

IDRS AND SENIOR DEBT
Positive rating pressure could be driven by continued increases in net AuM flows, further improvements in client, product and geographical diversification, stable earnings generation, and consistently low leverage. Conversely, negative downward pressure could arise if indebtedness and leverage levels increase materially, fund performance consistently deteriorates, potentially increasing AuM outflows, or if significant reputation issues emerge to threaten Aberdeen's franchise.

SUBORDINATED DEBT AND OTHER HYBRID SECURITIES
AAM's subordinated debt ratings are broadly sensitive to the same considerations that might affect the company's IDR.