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Citing an expected increase in leverage amid turbulent markets, S&P Global Ratings has downgraded CI Financial Corp.

S&P lowered its rating on the asset management giant to BBB from BBB+, saying that it expects the firm’s leverage to increase in 2020 due to “persistent net outflows coupled with adverse equity markets.”

The rating outlook is stable.

The rating agency said that CI’s assets under management (AUM) have “declined meaningfully over the past several weeks,” and that it expects this to continue thanks to the recent market turmoil.

Even if AUM were stable, S&P said that the firm’s leverage would increase beyond the threshold for its previous credit rating.

“Growth in the company’s AUM over the past four years was almost entirely driven by market appreciation and the acquisition of Sentry, offset by net outflows,” S&P said in a research note.

“Considering the company’s persistent net outflows, equity exposure (about 60% of AUM at year-end 2019) and modest investment performance, we expect net outflows to continue along with market depreciation, resulting in lower earnings over the next 12 months,” it said.

S&P said its outlook for CI is stable, “indicating our expectation that leverage will remain between 2.0x and 3.0x over the next 12 months, while investment performance remains modest and AUM deterioration continues due to net outflows and market depreciation.”

The rating agency suggested it could lower the rating if leverage increases beyond the 3.0x mark, “if net outflows increase significantly, if investment performance weakens significantly, if the market pullback worsens beyond our base-case scenario or due to a combination of these factors.”

CI’s CEO, Kurt MacAlpine, will be hosting a webcast for investors on March 23 at 1 p.m. ET to update shareholders.

“My primary objective for scheduling this call is to provide our investors with a forum to ask questions,” MacAlpine said in a statement.

“As one of Canada’s largest and most diversified asset and wealth managers, CI is financially sound, focused on engaging with clients and continuing to execute our strategic plans, guided by the priorities of modernizing our asset management business, expanding our wealth management platform and globalizing the firm,” he said.