The Baa3 senior debt ratings of Fidelity National Financial Inc. have been placed on review for possible downgrade by Moody's Investors Service following FNF's announcement that it intends to create a publicly traded, majority-owned title insurance holding company.The restructuring calls for borrowing an additional $500 million under a new bank credit facility at the new holding company, which would subordinate the creditors of the ultimate holding company, the rating agency said. Moody's also affirmed the insurance financial strength ratings of FNF's primary insurance operating subsidiaries at A3, but the rating outlook was changed to negative because of concern that FNF may increase its use of financial leverage. Moody's also affirmed the ratings (Ba3 senior) of FNF's 75%-owned subsidiary, Fidelity National Information Services. Moody's said several factors point toward further strain on the company's leverage profile, including FNF's "history of aggressive use of debt, a demonstration of management's willingness to maximize shareholder value to the potential detriment of creditors, and management's indication that it is considering large-scale acquisitions that could be financed in part through debt."
