Fitch rates Express notes BBB

Fitch Ratings said it assigned a BBB rating to Express Scripts Inc.'s proposed senior notes issuance. The company's BBB issuer default rating, senior bank credit facility and existing senior notes remain on Rating Watch negative.

The proceeds of the new notes are expected be used to prefund, in part, the anticipated acquisition of Medco Health Solutions, Inc. If the acquisition is not completed, Express must redeem the notes at 101.

The Negative Watch reflects the expected increase in leverage required to complete the transaction. Fitch estimates that Express' pro forma leverage will be 2.9 times to 3.1 times. The agency said that the company will need to reduce leverage below 2 times within 18 months of the transaction's close in order to maintain its BBB ratings.

At the same time, Fitch believes the proposed acquisition is strategically sound, fits within Express' core competencies, offers a portfolio of complimentary ancillary services and provides potential for gains in efficiencies of scale.

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