Moody's may cut Universal Health

Moody's Investors Service said it placed Universal Health Services, Inc.'s Baa3 senior unsecured debt rating under review for possible downgrade following its decision to acquire Psychiatric Solutions, Inc.

Psychiatric Solution's senior secured revolving credit facility of Ba2 (LGD 2, 25%), senior secured term loan due 2012 of Ba2 (LGD 2, 25%), senior subordinated notes due 2015 of B3 (LGD 5, 81%), corporate family rating of B1 and probability of default rating of B1 are unchanged. The agency said it expects to withdraw these ratings when the transaction closes.

Total consideration for the purchase, inclusive of about $1.1 billion of Psychiatric Solution's debt, is expected to be about $3.1 billion.

The downgrade review incorporates an expectation that the company's credit metrics immediately following the transaction will no longer be reflective of an investment-grade issuer, Moody's said.

The review will focus on the extent of downward rating pressure, the resulting credit metrics and the expected timing of improvements in metrics.

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