Moody’s downgrades FMR’s senior debt

(Investmentnews) - Moody's Investors Service downgraded the long-term senior unsecured debt rating of FMR LLC, the parent company of Fidelity Investments of Boston, from Aa3 to A1 as of Jan. 11.

 

At the same time, they upgraded the ratings outlook from negative to stable.

The downgrade reflects the loss of the dominating market share lead and a shift in revenue mix toward lower margin defined-contribution plan servicing and higher volatility brokerage businesses, Moody's said in a statement.

The New York-based credit research organization also cited the company's diminished financial flexibility caused by its employee incentive programs.

Approximately $2.1 billion in notes are affected, Moody's reported.

"While Fidelity's recent trends in investment performance show improvement, our action today recognized that the gap between Fidelity and other large mutual fund providers has largely been eliminated," Moody's vice president and senior credit officer Matthew Noll said in the statement.

"Higher financial leverage and thinning profit margins also contributed to the rating pressure."

 

Read more at Investmentnews