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Announcement:

Moody's places the ratings of Man Group plc on review for possible downgrade (senior at Baa2)

11 Apr 2012

London, 11 April 2012 -- Moody's Investors Service has today placed all debt and preferred stock ratings of Man Group plc ("Man" or the "Company") on review for possible downgrade (senior at Baa2). A complete list of ratings is available at the end of this press release.

RATING RATIONALE

Moody's noted that the rating review reflects continuing challenges in the Company's core business including:

(1) ongoing pressures on earnings, margins and funds under management (FUM) growth which are unlikely to return to historic levels in the near term. This is the result of general market pressures as well as weaker sales of guaranteed products, changes in Man's product mix toward lower margin products such as managed accounts and the lower margins achieved by the GLG product range, leading to overall lower margins, as contrasted with Man's historic margins prior to the GLG acquisition;

(2) continued underperformance from key funds and their historical rates of return -- leaving them below high-water marks, despite the improvement of equity markets in early 2012 from the challenging conditions that prevailed in the second half of 2011;

(3) significant decline in debt coverage ratio over the last five years; and

(4) pressures on the hedge fund business model more generally, where underperformance relative to investor expectations has called into question the sustainability of high fees.

During the rating review, Moody's will evaluate the following factors: (1) First quarter financial results; (2) the likelihood of a sustainable turnaround in FUM trends; (3) the potential for improvement in earnings, leverage, and coverage metrics; and (4) policies related to capital and liquidity management.

Man has changed its financial year end from March to December and hence its 2011 year end represents nine months of financial results. The Company reported revenues of US$1,254 million for the nine month period, from US$1,655 million for the previous twelve months to March 2011. Man's pre-tax operating margin was 15.4% compared to 18.6% in the previous year and its aggregate gross management fee margin decreased from 280bps to 230bps during the period due to lower guaranteed product FUM and the inclusion of GLG products for the full period. Man's FUM has declined 15% from US$69.1 billion in March 2011 to US$ 58.4 billion as at December 2011. Excluding the US$300 million acquisition of Ore Hill from the total FUM, this drop in FUM was due to US$1.5 billion in net outflows, US$ 4 billion in negative performance, FX movements of US$1.7 billion and de-gearing of US$3.8 billion.

Moody's noted several factors that partly offset the negative trends including: (1) a debt buyback completed in 2011 which has reduced Man's overall gross indebtedness from US$ 1,478 million in March 2011 to US$1,066 million in December 2011, although the gross debt level is substantially higher than the 2008 and 2009 levels; (2) Man's strong liquidity with a healthy net cash position estimated at US$573 million as at December 2011, though lower than US$881 million in March 2011; (3) Man's cost savings plan of US$75 million announced in January 2012, of which US$50 million is expected to be implemented in 2012 and US$25 million in 2013; (4) Man's improved product, geography and investor base diversification from the GLG acquisition, which should strengthen its position in the long-term; and (5) Man continuing to maintain a strong market position in the alternative investments industry. Nevertheless, Moody's said that the strength and stability of Man's future revenue and earning streams has weakened due to recent business trends.

Man Group plc is an asset management company domiciled in the UK, specialised in the alternative investment management business. The company had total funds under management of US$58.4 billion as at 31 December 2011 and reported shareholders' equity of US$4.1 billion at 31 December 2011.

The following ratings were placed on review:

- Man Group plc -Senior Unsecured Debt Rating -- Baa2, rating under review

- Man Group plc - Subordinated Debt -- Baa3, rating under review

- Man Group plc - Perpetual Subordinated Capital Securities -- Ba1, rating under review

- Man Group plc USD3 billion EMTN programme - Senior Notes -- (P)Baa2, rating under review

- Man Group plc USD3 billion EMTN programme - Dated Subordinated Notes -- (P)Baa3, rating under review

- Man Group plc USD3 billion EMTN programme - Undated Subordinated Notes -- (P)Baa3, rating under review

- Man Group plc USD3 billion EMTN programme - Junior Subordinated Notes -- (P)Ba1, rating under review

- Man Group plc USD3 billion EMTN programme - Short-Term Notes -- (P)P-2, rating under review

The principal methodology used in this rating was Moody's Global Rating Methodology for Asset Management Firms published in October 2007. Please see the Credit Policy page on www.moodys.com for a copy of this methodology.

REGULATORY DISCLOSURES

For ratings issued on a program, series or category/class of debt, this announcement provides relevant regulatory disclosures in relation to each rating of a subsequently issued bond or note of the same series or category/class of debt or pursuant to a program for which the ratings are derived exclusively from existing ratings in accordance with Moody's rating practices. For ratings issued on a support provider, this announcement provides relevant regulatory disclosures in relation to the rating action on the support provider and in relation to each particular rating action for securities that derive their credit ratings from the support provider's credit rating. For provisional ratings, this announcement provides relevant regulatory disclosures in relation to the provisional rating assigned, and in relation to a definitive rating that may be assigned subsequent to the final issuance of the debt, in each case where the transaction structure and terms have not changed prior to the assignment of the definitive rating in a manner that would have affected the rating. For further information please see the ratings tab on the issuer/entity page for the respective issuer on www.moodys.com.

The rating has been disclosed to the rated entity or its designated agent(s) and issued with no amendment resulting from that disclosure.

Information sources used to prepare the rating are the following: parties involved in the ratings, parties not involved in the ratings, public information, and confidential and proprietary Moody's Investors Service information.

Moody's considers the quality of information available on the rated entity, obligation or credit satisfactory for the purposes of issuing this review.

Moody's adopts all necessary measures so that the information it uses in assigning a rating is of sufficient quality and from sources Moody's considers to be reliable including, when appropriate, independent third-party sources. However, Moody's is not an auditor and cannot in every instance independently verify or validate information received in the rating process.

Moody's Investors Service may have provided Ancillary or Other Permissible Service(s) to the rated entity or its related third parties within the two years preceding the credit rating action. Please see the special report "Ancillary or other permissible services provided to entities rated by MIS's EU credit rating agencies" on the ratings disclosure page on our website www.moodys.com for further information.

Please see the ratings disclosure page on www.moodys.com for general disclosure on potential conflicts of interests.

Please see the ratings disclosure page on www.moodys.com for information on (A) MCO's major shareholders (above 5%) and for (B) further information regarding certain affiliations that may exist between directors of MCO and rated entities as well as (C) the names of entities that hold ratings from MIS that have also publicly reported to the SEC an ownership interest in MCO of more than 5%. A member of the board of directors of this rated entity may also be a member of the board of directors of a shareholder of Moody's Corporation; however, Moody's has not independently verified this matter.

Please see Moody's Rating Symbols and Definitions on the Rating Process page on www.moodys.com for further information on the meaning of each rating category and the definition of default and recovery.

Please see ratings tab on the issuer/entity page on www.moodys.com for the last rating action and the rating history. The date on which some ratings were first released goes back to a time before Moody's ratings were fully digitized and accurate data may not be available. Consequently, Moody's provides a date that it believes is the most reliable and accurate based on the information that is available to it. Please see the ratings disclosure page on our website www.moodys.com for further information.

Please see www.moodys.com for any updates on changes to the lead rating analyst and to the Moody's legal entity that has issued the rating.

Joanne Job
Analyst
Managed Investments Group
Moody's Investors Service Ltd.
One Canada Square
Canary Wharf
London E14 5FA
United Kingdom
JOURNALISTS: 44 20 7772 5456
SUBSCRIBERS: 44 20 7772 5454

Yaron Ernst
MD - Managed Investments
Managed Investments Group
JOURNALISTS: 44 20 7772 5456
SUBSCRIBERS: 44 20 7772 5454

Soo Shin-Kobberstad
Vice President - Senior Analyst
Managed Investments Group
Moody's Investors Service Ltd.
One Canada Square
Canary Wharf
London E14 5FA
United Kingdom

Releasing Office:
Moody's Investors Service Ltd.
One Canada Square
Canary Wharf
London E14 5FA
United Kingdom
JOURNALISTS: 44 20 7772 5456
SUBSCRIBERS: 44 20 7772 5454

Moody's places the ratings of Man Group plc on review for possible downgrade (senior at Baa2)
No Related Data.
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