Moody's assigns Encompass notes B1

Moody's Investors Service said it assigned a B1 rating to Encompass Health Corp.'s new senior unsecured notes due 2031.

There is no change to Encompass’ other ratings, including the Ba3 corporate family rating, Baa3 ratings on Encompass' senior secured revolving credit facility and term loan and B1 ratings on the senior unsecured notes. There is also no change to the SGL-1 speculative grade liquidity rating, Moody’s said.

Proceeds will be used with cash to refinance the $700 million of senior unsecured notes due 2024.

"We view this transaction as being credit positive, given that the benefits of the elongated maturity profile and moderate deleveraging will more than offset the reduction in Encompass' excess liquidity," stated Jonathan Kanarek, a Moody's vice president and senior credit officer, in a press release. Pro forma for the refinancing, Encompass' adjusted debt/EBITDA is about 4x as of June 30.

The outlook is stable.

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