Moody's rates DaVita loan Ba2

Moody's Investors Service said it assigned a Ba2 rating (LGD2, 34%) to DaVita Inc.'s $200 million senior secured term loan A-2 facility due 2016, which will have identical terms as the tranche B term loan.

In addition, Moody's also affirmed DaVita's upsized $350 million senior secured revolving credit facility at Ba2.

Proceeds will be used for general corporate purposes.

Moody's affirmed DaVita's Ba3 corporate family and probability-of-default ratings and the speculative grade liquidity rating of SGL-1.

The outlook is stable.

The company also has $1.55 billion of senior notes due 2018 and 2020, both rated B2 (LGD5, 86% from 83%).

DaVita's Ba3 corporate family rating is supported by the company's position as the second largest dialysis service provider in an otherwise very fragmented segment, the agency said.

DaVita also benefits from the recurring nature of the treatments and customers' high loyalty to their clinic, the agency noted.

The rating also reflects the company's limited diversification of revenue streams and continued uncertainty surrounding changes to Medicare reimbursement that took effect on Jan. 1, 2011, along with any additional revenue cuts expected from the Congressional committee charged with finding $1.2 to $1.5 trillion in debt reduction over the next decade, according to the agency.

The outlook also reflects expectation that leverage should improve below 4 times by the end of fiscal 2011, based on EBITDA growth, Moody's said.

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