Standard & Poor’s assigned its “AA-” senior unsecured debt rating to Marsh & McLennan Companies’ two-part $750 million notes offering based on the group’s diverse and well-positioned operating subsidiaries. S&P indicated that Marsh & McLennan’s very strong operating margins that support above-average debt-service capabilities influenced the rating.
The notes, issued under Rule 144A, are divided between $500 million due March 15, 2007, and $250 million due March 15, 2012. The proceeds will be used to refinance certain commercial paper obligations and, consequently, will have no impact on the company’s leverage. The notes are not a draw down of the company’s shelf registration.
S&P expects Marsh’s operating margins to remain strong, with brokerage operations driving the majority of growth in earnings and revenues, but believes the asset management and consulting businesses will be challenged to produce similar growth in earnings and revenues. In the long run, the company’s debt tolerance is expected to remain at about 40 percent of its capital structure.
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