Fitch assigns Centene notes BB+

Fitch Ratings said it assigned a BB+ rating to the $2 billion senior unsecured note issuance of Centene Corp. Proceeds will partially fund a redemption of $2 billion in senior notes, and consequently, financial leverage is not expected to change materially with the transaction.

The new $2 billion 10-year senior debt issuance is rated at the same level as Centene’s existing senior unsecured notes, which is one notch below the holding company issuer default rating and reflects standard notching based on Fitch’s rating criteria.

Centene expects to redeem $1 billion of its 4¾% senior notes maturing in 2022 as well as $1 billion of its 6 1/8% senior notes maturing in 2024. Fitch said it expects the annual interest expense savings on this transaction to be significant.

“CNC’s financial leverage ratio at the close of the acquisition is estimated to be just below 40% and debt-to-EBITDA is estimated to be 3.9x, both of which are above expectations for the company’s current rating category. The capitalization and leverage score carries a higher influence on the rating, and consequently, progress toward stated deleveraging targets would put upward pressure on the company’s ratings,” said Fitch in a press release.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.