BlackRock’s ratings affirmed by Moody’s with outlook changed to stable

Published 01/07/2025, 22:52
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Investing.com -- Moody’s Ratings has affirmed BlackRock (NYSE:BLK), Inc.’s backed senior unsecured Aa3 ratings while changing the outlook to stable from negative following the completion of BlackRock’s acquisition of HPS Investment Partners.

The rating agency confirmed today that it maintained BlackRock’s long-term and short-term issuer ratings at Aa3 and P-1, respectively. Moody’s also affirmed the (P)Aa3 senior unsecured shelf, the (P)A1 subordinate shelf, the (P)A2 preferred shelf and preferred shelf non-cumulative, as well as the P-1 commercial paper rating.

The outlook change reflects BlackRock’s progress in integrating its recent acquisitions, including Global Infrastructure Partners (acquired in October 2024) and Preqin (acquired in March 2025), along with the strategic benefits expected from the all-stock acquisition of HPS that closed today.

Moody’s expressed increased confidence that BlackRock’s leverage ratio will fall below the 1.5x downgrade trigger following the HPS transaction closure. The rating agency cited the company’s strong organic growth over the past year and favorable market performance as contributing factors.

With the HPS acquisition, BlackRock will manage approximately $190 billion in private debt, positioning it among the top five private credit franchises globally. This expanded scale strengthens BlackRock’s competitive position in private credit markets, particularly with insurance clients and in private wealth channels.

Since acquiring GIP, BlackRock has announced a $30 billion AI infrastructure initiative with Microsoft (NASDAQ:MSFT), MGX, and other partners. Meanwhile, Preqin is being integrated into BlackRock’s technology and data businesses to enhance portfolio solutions for clients.

The Aa3 long-term senior debt and P-1 short-term ratings reflect BlackRock’s position as the world’s largest asset manager with high earnings capacity, moderate financial leverage, strong profitability, and a robust liquidity profile.

According to Moody’s, BlackRock’s rating could be upgraded if it continues to increase fees while growing technology-based revenues, raising its operating margin above 45% and reducing adjusted leverage below 1.00x. Conversely, a downgrade could occur if leverage exceeds 1.5x for an extended period or if acquisition integration issues impair financial performance.

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