TEXT-S&P rates Aetna's senior unsecured notes 'A-'
May 1 - Standard & Poor's Ratings Services said today that it assigned its 'A-' senior unsecured debt rating to Aetna Inc.'s (NYSE:AET) planned issuance of $750 million in senior unsecured notes. The issuance will consist of $250 million of five-year maturities and $500 million of 30-year maturities. The rating on the new issuance reflects Aetna's very strong business profile, earnings, and financial flexibility, and strong liquidity. Offsetting factors include Aetna's exposure to moderately stressed industry fundamentals that we expect to persist though 2012 and its relatively aggressive share repurchase and stockholder dividend strategy. We expect Aetna to use the offering proceeds to repay short-term debt and for other general corporate purposes. We believe this effective restructuring of Aetna's balance-sheet obligations will modestly enhance near-term liquidity and financial flexibility. We expect Aetna to manage its adjusted debt-to-capital ratio (including unfunded post-retirements obligations and the net present value of operating leases) to about 35% in the near to intermediate term. We expect EBITDA interest coverage (including imputed interest on operating leases) to be more than 10x, which is conservative for the rating category. Aetna's liquidity position is currently strong, with expected cash and marketable securities of $700 million to $1 billion at the holding company and unregulated subsidiaries at year-end 2012. In 2012, we expect the holding company to receive dividends of $1.7 billion to $2 billion from the operating companies, of which approximately two-thirds will come from regulated insurance subsidiaries, which is slightly more than ordinary dividend capacity, which would support very strong debt service. RATINGS LIST Aetna Inc. Counterparty Credit Rating A-/Positive/A-2 New Rating $750 Mil. Sr. Unsec. Notes A- RELATED CRITERIA AND RESEARCH Holding Company Analysis, June 11, 2009 Complete ratings information is available to subscribers of RatingsDirect on the Global Credit Portal at www.globalcreditportal.com. All ratings affected by this rating action can be found on Standard & Poor's public Web site at www.standardandpoors.com. Use the Ratings search box located in the left column.
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