Fitch affirms American Capital's ratings

Fitch affirmed American Capital's issuer default rating and senior unsecured debt ratings at "BBB," which are considered investment grade.

Fitch placed a negative outlook on the company as it has taken unrealized losses on its portfolio investments over the past year amid the ongoing credit crisis. Those losses have put pressure on debt covenants, the ratings agency said in a statement.

Though Fitch said the underlying performance of the investment portfolio remains solid, during a recessionary period performance is uncertain and "any significant deterioration in credit quality would generate additional downward pressure on current ratings."

Fitch said it expects the pace of unrealized losses to slow from what the company has seen the past year.

American Capital's funding and liquidity has been constrained by the losses, and Fitch noted the company's recently announced actions to improve liquidity and reduce leverage are necessary.

Earlier this week, American Capital said it will not pay dividends for the rest of the year and will retain long-term capital gains in an effort to improve its liquidity and reserves amid the ongoing credit crisis.