TEXT-S&P rates Wellpoint's senior unsecured debt 'A-'
Oct 2 - Standard & Poor's Ratings Services said today that it has assigned its unsolicited 'A-' senior unsecured debt rating to WellPoint Inc.'s (NYSE:WLP) proposed $1.35 billion 30-year convertible notes offering. We expect WellPoint to use the offering proceeds partly to fund growth initiatives that include deal funding. In July, we revised our outlook on WellPoint to stable from positive in connection with its announced acquisition of Amerigroup Corp. This action reflected diminished potential for upside rating change within 12-24 months because of related deal risks. Key factors supporting our current rating on WellPoint and the stable outlook include the sustained strength of its business profile relative to its peer group and the sector overall. Operating performance, discretionary cash-flow generation, liquidity, and financial flexibility are collectively strong and increasingly well supported by the diversity and scale of its core business lines. By year-end 2012 we expect total revenue to exceed $60 billion and membership (excluding BlueCard members) to be 28 million (28.5 million medical members). We expect operating income (EBIT) and cash flow (EBITDA) to be more than $4 billion (6%-7% return on revenue) and $4.5 billion (7%-8% margin), respectively. If WellPoint were to perform at a level consistent with these expectations, adjusted EBITDA interest coverage would fall within our intermediate term range of expectation of 8x-10x. These results, combined with an expected cash position near $1 billion at the holding company level at year-end 2012 would likely continue to support a very strong liquidity position and strong financial flexibility assessment overall. RELATED CRITERIA AND RESEARCH Holding Company Analysis, June 11, 2009 RATINGS LIST WellPoint Inc. Counterparty Credit Rating A-/Stable/A-2 New Rating WellPoint Inc. Sr. Unsec. $1.35 Bil. 30-yr. Notes A- This unsolicited rating(s) was initiated by Standard & Poor's. It may be based solely on publicly available information and may or may not involve the participation of the issuer. Standard & Poor's has used information from sources believed to be reliable based on standards established in our Credit Ratings Information and Data Policy but does not guarantee the accuracy, adequacy, or completeness of any information used. 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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