Fitch Ratings placed NewStar Financial’s Long-Term and Short-Term Issuer Default Ratings ‘BB-‘ and ‘B’, respectively, on rating watch evolving following the announcement that First Eagle Investment Management is acquiring NewStar.

NewStar’s unsecured debt rating of ‘BB-‘ and subordinated debt rating of ‘B/RR6’ were also placed on rating watch evolving.

The rating watch evolving reflects uncertainty as to the ultimate credit profile of NewStar, as First Eagle is a privately-owned investment firm that is not currently rated by Fitch and the fact that the transaction includes a “Go Shop” period during which another party could make an offer for NewStar.

Fitch expects that all rated debt would be repaid in full at or before the close of the transaction, as a result of change of control provisions within existing debt documents. Therefore, the debt is expected to be marked as paid-in-full and those withdrawn at the time of a transaction close.

Based in New York, First Eagle is an independent, privately-owned investment firm with $116 billion in assets under management (AUM) as of Sept. 30, 2017. First Eagle plans to fund the merger with cash from its balance sheet, the assumption of a modest amount of existing debt related to the assets being purchased and NewStar cash. Following the completion of the transaction, First Eagle plans to offer NewStar’s middle-market and broadly-syndicated, liquid credit strategies to institutional and retail investors.

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First Eagle Investment to Acquire NewStar Financial