Moody's rates Tenet notes Ba2, B3

Moody's Investors Service said it assigned a Ba2 (LGD2) rating to Tenet Healthcare Corp.'s proposed $500 million of floating-rate senior secured notes due 2020 and a B3 (LGD5) rating to its proposed $1.9 billion senior unsecured notes due 2023. There is no change to the existing ratings of the company, including the B1 corporate family rating and B1-PD probability of default rating, and the negative outlook is unchanged.

Note proceeds will be used to fund Tenet's share of the equity contribution to the previously announced joint venture with Welsh, Carson, Anderson & Stowe, to refinance about $1.5 billion of existing debt at United Surgical Partners International and to fund the acquisition of Aspen Healthcare Ltd.

The agency said the B1 corporate family rating reflects Tenet's high financial leverage and an aggressive debt-funded acquisition strategy.

Tenet's significant scale in each of its service lines and Moody's expectation that the company can successfully integrate newly acquired businesses support the rating, the agency said.

The negative outlook reflects Moody's view that Tenet has very little cushion to absorb negative developments or additional debt-funded acquisitions, share repurchases or shareholder distributions at the current rating level given its high financial leverage.

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