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S&P warns of risks in Raymond James purchase of Morgan Keegan

Standard & Poor's Rating Services, a credit rating agency, placed St. Petersburg's Raymond James Financial on its "Creditwatch" with negative implications.

S&P warned that Raymond James Financial's plan, announced Wednesday, to buy and integrate the Morgan Keegan investment firm for $930 million may weaken Raymond James. S&P said Raymond James may lack the depth of management to handle such a big transaction, that the company is used to growing on its own rather than absorbing large companies, and that the deal may require refinancing within a relatively short 18 months.

A ratings downgrade of Raymond James is possible, which would make it more expensive for the company to borrow money and could hurt its stock price.

Said S&P: "We could lower the rating if management doesn't demonstrate an effective plan for integration and doesn't retain enough high-revenue producers to justify the price paid for the company. We could also consider lowering the rating if the addition of Morgan Keegan's assets significantly lowers the overall quality of the combined assets on the balance sheet."

S&P warns of risks in Raymond James purchase of Morgan Keegan 01/13/12 [Last modified: Friday, January 13, 2012 4:01pm]
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