DBRS Confirms CI Financial Corp. and CI Investments Inc. at A (low)

DBRS Limited (DBRS) has today confirmed the Issuer Rating and Senior Unsecured Debt of CI Investments Inc. (CII) and the guaranteed Senior Unsecured Debentures of CI Financial Corp. (CI or the Company), all at A (low) with a Stable trend. The Issuer Rating of CII reflects CII’s contribution to CI as its major operating subsidiary, housing the mutual fund manufacturing operation and representing more than 95% of consolidated CI earnings. CI’s Senior Unsecured Debentures, the last of which matures December 16, 2014, benefits from a CII guarantee that ranks pari passu with the senior obligations of CII. Conversely, CII’s existing debentures are supported by a guarantee from CI on the same senior basis.

The primary driver of the ratings is the Company’s business franchise, relatively large size in the Canadian mutual fund industry and resulting scale/efficiency. Tempering these factors is the general uncertainty and volatility inherent in equity markets and increased competition from other wealth management service providers and products, which are pressuring the business model, market share and margins.

Strength in global equity markets through most of the past year has lifted CI’s assets under management (AUM) and, consequently, its earnings. With CI’s low debt levels, the Company’s strong and stable cash flow easily covers its debt obligations and reduces concern over the high dividend payout ratio. Under DBRS’s methodology for rating asset managers, CI performs very well on both business strengths and financial metrics, resulting in its strong investment-grade rating.

Notes:
All figures are in Canadian dollars unless otherwise noted.

The related regulatory disclosures pursuant to the National Instrument 25-101 Designated Rating Organizations are hereby incorporated by reference and can be found by clicking on the link to the right under Related Research or by contacting us at info@dbrs.com.

The applicable methodologies are DBRS’s Rating Asset Management Companies and DBRS Criteria: Guarantees and Other Forms of Explicit Support, which can be found on our website under Methodologies.

These ratings have been endorsed by DBRS Ratings Limited for use in the European Union.