Fitch assigns Universal Health bonds BBB-

Fitch Ratings said it assigned a BBB- rating to the $600 million of senior secured bonds issued by Universal Health Services, Inc., consisting of $300 million due 2019 and $300 million due 2022.

Proceeds are expected to be used to refinance existing debt.

The issuer default rating is currently BB+ and the outlook is stable.

Assuming substantially all the debt proceeds are used for refinancing, the agency views the transaction as favorable to Universal Health’s credit profile because it will refinance a portion of debt due in the 2015-2016 timeframe.

As of March 31, 2016 maturities represented 86% of total debt outstanding. Subsequent to this transaction, this figure could fall to below 70%.

Universal Health has good flexibility at its current BB+ rating in the event that not all the proceeds from this issuance are used for refinancing existing debt, Fitch said.

The agency said Universal Health has continued to demonstrate a commitment to debt repayment, resulting in debt-to-EBITDA of 2.3 times at March 31, compared to 4.9 times (reported) at Dec. 31, 2010. Fitch expects Universal Health to operate with debt leverage of 2.25 times to 3 times over the ratings horizon.

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