The request came after CI Financial Corp. announced its intention to acquire a majority stake in a Canadian insurance company, which Morningstar DBRS deemed a significant event. CI Financial Corp. argued that the acquisition would significantly impact the firm’s credit profile and therefore, requested the withdrawal of the ratings. Morningstar DBRS, however, maintains its coverage of CI Financial Corp.
This means that CI will not be required to provide any specific information or documentation to Morningstar DBRS for their ratings. This approach, while seemingly beneficial for CI, has its own set of challenges. **Challenges of Unrequested Ratings:**
* **Lack of Transparency:** CI’s ratings are not subject to the same level of scrutiny and transparency as those obtained through a formal rating process. This lack of transparency can raise concerns about the objectivity and reliability of the ratings.
The rating agency also noted that its outlook on CI’s credit ratings also remained negative, reflecting “deteriorating credit fundamentals.” In April, Moody’s Ratings downgraded CI’s debt to Baa3 from Baa2. CI’s request to Morningstar DBRS represents the second time the firm has asked a rating agency to withdraw its coverage. In May 2023, S&P Global Ratings withdrew its rating of CI following a request from the firm, but only after downgrading CI to BB+ from BBB- and revising the rating outlook for CI to stable from negative. As of June 30, CI reported net debt of $3.5 billion, up from $2.9 billion at the end of the same quarter last year, and a net debt to adjusted EBITDA ratio of 3.5, up from 2.9 at the end of the same quarter the previous year.
In July, CI acquired two U.S.-based registered investment advisors with combined assets under management of $8.1 billion, and in May, the firm acquired two U.S. family offices with combined assets of $5.7 billion. On Aug. 26, CI announced a share buyback, saying it would purchase up to five million of its outstanding common shares for cash at $17.50 per share. At the close of trading Sept. 12, CI’s share price was $17.63. Subscribe to our newsletters Subscribe
