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Global Credit Research - 17 May 2010
New York, May 17, 2010 -- Moody's Investors Service has assigned an A1 debt rating to $750
million of notes to be offered by Franklin Resources, Inc.
(Franklin). The new senior unsecured notes will be issued in three,
five and ten-year tranches with the proceeds expected to be used
to pay down outstanding commercial paper and provide additional liquidity.
The outlook on all ratings remains stable.
Commenting on the rating assignment, Moody's Vice President
Rory Callagy stated, "Franklin's balance sheet continues
to be a point of strength for the rating. We expect the company
to continue to demonstrate conservative balance sheet management through
minimal leverage and maintain a strong liquidity profile."
On a pro- forma basis, total debt outstanding will return
to a level more consistent with the company's debt levels pre-
2008. As of March 31, 2010, Franklin generated $1.86
billion in EBITDA over the trailing twelve months, which will increase
the pro forma debt / EBITDA to approximately 0.4x from 0.2x.
Franklin's significant cash position, as well as its strong
cash flows, position it to comfortably service its debt, as
well as reinvest in the business for growth. The company's
cash and cash equivalents and investments were $5.7 billion
at March 31, 2010 which is up approximately 6% from December
31, 2009. We expect the company will continue to maintain
a strong liquidity profile and disciplined capital management process.
In a moderating operating environment for asset managers, Moody's
expects Franklin's credit metrics to continue their gradual improvement.
Factors that would support this trend include: 1) continuation in
the strong rate of new sales across all investment products; 2) sustained
benchmark beating investment performance across majority of mutual funds,
and 3) steady improvement in operating performance.
The following ratings were assigned with a stable outlook:
Franklin Resources, Inc. -- $750 million
of three-year, five-year and ten-year senior
notes at A1
The following ratings of Franklin Resources, Inc. were affirmed
with a stable outlook:
- commercial paper rating at P-1;
- provisional senior shelf at (P)A1;
- provisional subordinated shelf at (P)A2; and
- provisional preferred stock shelf at (P)A3.
Moody's last rating action on Franklin Resources, Inc..
was on March 12, 2008, when Moody's assigned a provisional
credit ratings to Franklin Resources, Inc.'s senior
shelf registration at P(A1) .
The principal methodology used in rating Franklin Resources. Inc.
is the October 2007 Moody's Global Rating Methodology for Asset Management
Firms, which can be found on www.moodys.com in the
Rating and Methodologies sub-directory under the Research and Ratings
tab. Other methodologies and factors that may have been considered
in the process of rating this issuer can be found in the Rating Methodologies
sub-directory on Moody's website.
For more information, please visit www.moodys.com
Robert M. Callagy
Vice President - Senior Analyst
Global Managed Investments Group
Moody's Investors Service
Moody's rates Franklin Resources' senior notes A1
Senior Vice President
Global Managed Investments Group
Moody's Investors Service
No Related Data.
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