Moody's rates DaVita loans Ba2, notes B2

Moody's Investors Service said it assigned Ba2 (LGD2, 29%) ratings to DaVita Inc.'s proposed senior secured credit facility, consisting of a $250 million revolving credit facility due 2015, a $1 billion term loan A due 2015 and a $1.75 billion term loan B due 2016, and B2 (LGD5, 83%) ratings to the company's proposed $1.45 billion of senior unsecured notes due 2018 and 2020.

The Ba3 corporate family and probability of default ratings and SGL-1 speculative grade liquidity rating are unchanged, as is the Ba1 (LGD2, 22%) rating assigned to the company's existing credit facility, the B1 (LGD4, 67%) rating assigned to its 6 5/8% senior unsecured notes due 2013 and the B2 (LGD6, 90%) rating assigned to its 7¼% senior subordinated notes due 2015.

The outlook is stable.

The proceeds from the new debt will be used to refinance the company's existing debt and raise additional funds for general corporate purposes, including potential acquisitions, share repurchases and other growth investments.

The agency said the affirmation of the Ba3 corporate family rating reflects the reduction in refinancing risk offset by a considerable increase in leverage. Pro forma adjusted leverage as of June 30 is estimated to be 4.1 times, compared with 3.4 times before the proposed refinancing.

The rating continues to reflect the company's position as the second-largest dialysis service provider in an otherwise very fragmented segment, the benefits provided by the recurring nature of the treatments and customers' high loyalty to their clinic, the agency said.

The rating is constrained by the company's limited diversification of revenue streams and uncertainty around reimbursement issues, Moody's said.

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