Health Net says Moody's downgrade triggers coupon step up on 8 3/8% notes

New York, Sept. 13 - Health Net Inc. said the coupon step up on its 8 3/8% senior notes due 2011 was triggered by Moody's Investors Service's recent downgrade of the company to junk.

The $400 million principal amount of securities will now pay interest at 9 7/8%.

Health Net said the change would increase annual interest expense by $6 million.

Moody's downgraded the Woodland Hills, Calif., operator of health plan's senior unsecured debt to Ba1 from Baa3 on Sept. 8.

The coupon increase comes into effect if either Moody's or Standard & Poor's rates Health Net's senior unsecured debt at a junk level.

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