Moody's downgrades Aetna, upgrades Coventry Health Care

Moody's Investors Service said it downgraded Aetna Inc.'s senior debt rating to Baa2 from Baa1 following the announcement that it completed its acquisition of Coventry Health Care, Inc. As a result of Aetna's assumption of Coventry's senior notes, Coventry's senior debt rating has been upgraded to Baa2 from Baa3. This completes the review that began Aug. 20, 2012, and the outlook on all the ratings is stable.

The agency said the downgrade of Aetna's ratings reflects the adverse financial impact of the transaction, which included the issuance of $2 billion of long-term debt, $500 million of short-term debt and the assumption of Coventry's $1.6 billion of outstanding senior notes.

The upgrade for Coventry reflects the alignment of its ratings with Aetna's ratings based on the assumption of Coventry's outstanding debt by Aetna and Aetna's plans to integrate Coventry's operations and businesses, Moody's said.

The agency commented that Aetna's ratings and stable outlook reflect its strong business profile, supported by its national presence, solid brand name and its product diversity.

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