Moody's gives Universal Health speculative rating
Moody's Investors Service assigned a "Ba2," or "speculative" rating on Thursday to hospital operator Universal Health Services Inc.'s corporate family and probability of default ratings.
"The assignment of the 'Ba2' corporate family rating reflects the significant increase in leverage incurred to complete the approximately $3.1 billion acquisition of Psychiatric Solutions Inc.," said Dean Diaz, a senior credit officer at Moody's, in a statement.
He said the rating incorporates Moody's expectation that the company will focus on reducing this initially significant level of leverage following the close of the transaction.
Moody's also assigned a "Ba2" rating to Universal Health's proposed senior secured credit facility, consisting of an $800 million revolver, a $1 million term loan A, and a $1.55 million term loan B. The outlook for those ratings are stable.
But, Moody's said, the company's existing senior notes, currently rated "Baa3," or lower medium grade, remain under review for possible downgrade. Moody's expects to downgrade the notes to "Ba2" at the close of the transaction.