S&P gives Universal Health loans BBB-

S&P said it affirmed its BB+ issuer credit rating on Universal Health Services Inc.

At the same time, the agency assigned its BBB- issue-level rating and 2 recovery rating to Universal's new $1 billion revolving credit facility, $2 billion term loan A and $500 million term loan B.

The recovery rating indicates expectations for substantial (70%-90%; rounded estimate: 80%) recovery in a default.

Proceeds from the transaction will be used to repay outstanding revolver borrowings as well as refinance the revolver, term loan A and 3.75% senior secured notes due in 2019.

S&P intends to withdraw the ratings on the existing revolver, term loan A and senior notes after the transaction closes.

“The ratings on Pennsylvania-based UHS reflect its well-established conservative financial policies that keep leverage lower than that of all its rated peers,” the agency said in a news release.

“The rating also considers third-party reimbursement risk; its leading market position (particularly in behavioral health) and its positioning in attractive markets for its acute-care business.”

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