The Wall Street Journal-20080114-FMR-s Debt Rating Is Downgraded
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FMR's Debt Rating Is Downgraded
Moody's Investors Service said it downgraded the long-term senior unsecured debt rating of FMR, the parent of fund giant Fidelity Investments, to A1 from Aa3.
The bond-rating firm said the downgrade, which affects about $2.1 billion of notes, reflects "the loss of the dominating market share lead that the company formerly enjoyed over its nearest competitors, a shifting revenue mix toward lower-margin defined-contribution plan servicing and higher volatility brokerage businesses, and the company's somewhat diminished financial flexibility caused by its employee incentive programs."
Constraints on profitability, "driven by the need to sustain competitive advantages in distributing products and services," also factored into the downgrade, Moody's said.
FMR's A1 rating is based on its "still very good market position, powerful distribution and technology platform, and the diversification benefit of its other asset-gathering businesses," Moody's said.
