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TEXT - S&P rates Aetna senior unsecured debt issue
November 5, 2012 / 7:34 PM / 5 years ago

TEXT - S&P rates Aetna senior unsecured debt issue

Nov 5 - As previously announced on Nov. 2, 2012, Standard & Poor's Ratings
Services assigned its 'A-' senior unsecured debt rating to Aetna Inc.'s
 (NYSE:AET) $2 billion debt issuance, which consists of a mix of 5-, 10-,
and 30-year maturities. Aetna will use the proceeds partially to fund its
acquisition of Coventry Health Care Inc., which it expects to close in mid-2013.
We believe the acquisition makes strategic sense for Aetna because it will
increase the diversity of Aetna's health insurance business portfolio,
especially by adding membership and revenue in the faster-growing Medicare
Advantage and managed Medicaid businesses. The acquisition also augments Aetna's
geographical diversity, adding business in key regions.

Key factors supporting Aetna's current rating include its very strong business 
profile and financial flexibility, as well as its strong earnings and 
liquidity profile. Offsetting factors include Aetna's exposure to moderately 
stressed industry fundamentals that we expect to persist through 2012 and its 
increased leverage resulting from the acquisition.

As of year-end 2013, we expect debt leverage (including unfunded 
postretirement obligations and operating leases) to be 40% to 45%, declining 
to less than 40% by 2015. Although these amounts are more than the 35% 
consistent with the current rating level, there are major mitigating factors, 
including very strong expected EBITDA coverage (9.5x to 10.5x in 2013 
increasing to 12x to 13x in 2015), significant cash-flow generation (more than 
$2 billion annually), and significant sources of unregulated cash flows. We 
expect the near-term level of share repurchases to diminish from recent 
historical levels, which will likely support liquidity and manage the capital 
structure toward our expectations.

RELATED CRITERIA AND RESEARCH
Holding Company Analysis, June 11, 2009

RATINGS LIST
Aetna Inc.
Counterparty Credit Rating                A-/Stable/A-2

New Rating
$2 Bil. Sr. Unsec. Debt Issue             A-

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