OREANDA-NEWS. S&P Global Ratings today said it assigned its 'BB+' issue rating on Legg Mason Inc.'s proposed junior subordinated notes due in 2056. We expect the issuance to be $250 million to $500 million. The issuer credit rating on Legg Mason remains 'BBB' with a stable outlook.

We expect the company to use the proceeds from the proposed debt issuance to repay a portion or the full amount of the outstanding borrowings under its revolving credit facility and for general corporate purposes.

In March 2016, Legg Mason issued $450 million of 4.75% senior notes due in 2026 and $250 million of 6.375% junior subordinated notes due in 2056. The company used the net proceeds of these offerings to finance the acquisitions of EnTrust in May 2016 and Clarion Partners in April 2016. As of June 30, the company had about $1.8 billion of outstanding long-term debt and $500 million of short-term borrowings. We expect Legg Mason to continue to operate with debt to EBIDA of 2x-3x.

We view the company's subordinated notes as hybrid capital with intermediate equity content and rate them two notches below the issuer credit rating, reflecting subordination and optional deferability risks.