S&P assigns A to Aetna notes

S&P said it assigned its A debt rating to Aetna Inc.'s proposed 30-year senior notes. The transaction does not affect the agency’s A long-term counterparty credit rating on the company.

Additionally, S&P said it expects Aetna to use the proceeds of the offering to repay a portion of its 1.5% senior notes due 2017, its floating-rate senior notes due 2017 and for general corporate purposes.

The agency also expects the transaction to be leverage neutral and for Aetna to maintain financial leverage of 38% to 40% and fixed-charge coverage (including imputed interest on operating leases) of more than 10x in 2017-2018.

“Aetna recently reported strong second-quarter 2017 earnings. The company substantially raised its earnings projections as it is benefiting from robust Medicare enrollment growth, favorable prior-period reserve development, and moderate health care cost trends,” S&P said in a news release.

“In addition, the individual exchange business, which Aetna is completely exiting for 2018, is performing better than we expected (though it will still generate a loss for the full-year).”

The agency said it believes Aetna is on track to meet or exceed its expected adjusted EBIT return on revenues of 7% to 8% for 2017.

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