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S&P lifts Magellan debt from junk
Standard & Poor's said it assigned recovery ratings of 1 to Magellan Health Services Inc.'s $50 million senior secured revolving credit facility due 2008 and $100 million senior secured term loan due 2008 and raised the company's senior secured debt to BBB- from BB.
Proceeds from the loans were used to refinance amounts outstanding under a pre-existing credit agreement.
The agency said the assignment of recovery ratings follows its review of a simulated default scenario that contemplates a payment default resulting from financial pressure due to a decline in cash flow caused by adverse business development attributed to customer loss, cost spikes, provider network disruption or acquisition-oriented impairment charges. Under such a scenario, Magellan would likely suffer from margin pressures and eventual member attrition, S&P said.
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