Moody's to Scrutinize Highmark's Credit Following West Penn Debt Deal
Moody's placed Highmark's "Baa1" and "Baa2" credit ratings on review for a possible downgrade, following the announcement that Highmark would buy West Penn's $726 million in bonds at 87.5 cents on the dollar. The review will impact roughly $1.1 billion of Highmark's debt.
Analysts said after the West Penn-Highmark merger finally closes, "Highmark's financial profile would be weakened as a result of the projected increase in financial leverage and the uncertainty of repayment of the purchased bonds," according to the report.
The total cost of the transaction currently stands are more than $1.6 billion, more than three times the original cost of $475 million. Moody's Senior Vice President Steven Zaharuk added that although the merger will improve Highmark's provider network, the steep increase in costs could limit Highmark's future investments.
More Articles on West Penn Allegheny Health System and Highmark:
© Copyright ASC COMMUNICATIONS 2015. Interested in LINKING to or REPRINTING this content? View our policies by clicking here.
To receive the latest hospital and health system business and legal news and analysis from Becker's Hospital Review, sign-up for the free Becker's Hospital Review E-weekly by clicking here.
New From Becker's Hospital CFO