Janus’ rating falls to junk status

Janus Capital Group Inc. of Denver saw its ratings drop a notch to junk status today courtesy of Standard & Poor’s of New York. Janus’ new BB+/B rating from S&P reflects its weakened ability to pay its debts as its assets under management have fallen considerably in recent months — a situation that is not expected to improve in the near term, the ratings agency said in a statement. “Janus has been harder-hit than most other rated asset managers during the global plunge in stock prices because it is primarily an equity shop,” Charles D. Rauch, a Standard & Poor’s credit analyst, said in the statement. Assets under management fell 40% year-over-year to $123.5 billion as of Dec. 31, according to S&P. The decline was due mostly to market deterioration of equity securities. In response to the tougher operating environment, Janus suspended share repurchases and implemented expense reductions of $40 million to $45 million. Those moves, however, may not be enough to restore Janus to fiscal health if the equity markets don't turn around soon, according to S&P. That’s because Janus has $275 million of notes maturing in September 2011 and another $300 million in June 2012. The ratings agency, however, maintained a “stable outlook” on Janus, meaning it doesn’t anticipate further downgrades in the near future.