Fitch: Universal loan BB+

Fitch Ratings said it assigned a BB+ rating to Universal Health Services, Inc.'s new $900 million term loan A-2 due August 2016.

The company has a BB issuer default rating, and the agency rates its senior secured bank facility and notes at BB+ and its senior unsecured notes at BB-. The outlook is stable.

The proceeds of the new term loan were used to repay a portion of the amounts outstanding under the company's term loan B due November 2016 and revolver.

The agency said Universal's credit metrics have improved significantly since its November 2010 Psychiatric Solutions, Inc. acquisition. The company's ratio of total debt to EBITDA was 2.85 times at June 30, and Fitch expects the ratio to be sustained below 3.4 times over the ratings horizon.

Acute care volumes and pricing are under extreme pressure due to persistently high unemployment, Fitch said, but higher profitability and a more stable revenue stream from Universal's behavioral health business have moderated the overall effects of the strained acute care business.

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