Moody’s applies Baa3 to Anthem units

Moody's Investors Service said it assigned a Baa3(hyb) subordinated debt rating to Anthem, Inc.'s equity unit offering.

The outlook is stable.

Anthem expects to use the combined net proceeds from the offering and the settlement of the purchase contracts for general corporate purposes and the repayment of debt including the repurchase of a portion of outstanding convertible debt.

Moody's said that under the offering, Anthem is expected to receive $900 million from the sale of equity units, which consist of subordinated debt due in 2028 and a purchase contract for Anthem stock in three years. Upon settlement of the purchase contracts in 2018, Anthem is expected to receive an additional $900 million.

The notes are a draw on the company's shelf registration, which it filed in April 2015.

Moody’s that the new debentures are expected to receive partial equity credit, according to its hybrid methodology, and receive standard notching treatment (i.e., rated one notch below senior debt at the holding company).

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