Moody’s revised the outlook for Nuveen and its parent company, Teachers Insurance and Annuity Association of America (TIAA), from stable to negative. Nuveen currently oversees $1.4 trillion in assets. The revision follows Nuveen’s $13.5 billion acquisition of European asset manager Schroders. This transaction marks the largest deal of its kind for a European asset manager.
The ratings agency cited concerns that high financing costs will weaken the financial profile of TIAA. Moody’s expects the deal to increase leverage and reduce capital adequacy. The acquisition also introduces significant execution and integration risks for the firm.
Moody’s anticipates that Nuveen will issue a substantial amount of debt to finance the purchase. This debt issuance is expected to constrain the firm's future profitability.