S&P ups GEO Group, debt

Standard & Poor's said it raised its corporate credit rating on GEO Group Inc. to BB- from B+.

The outlook is stable.

At the same time, the agency raised its rating on the company's senior secured debt to BB+ (two notches above the corporate credit rating) from BB. The recovery rating of 1, indicating that lenders could expect very high (90%-100%) recovery in the event of payment default or bankruptcy, remains unchanged.

In addition, S&P raised its rating on the company's senior unsecured debt to BB- (the same level as the corporate credit rating) from B+. The recovery rating of 4, indicating that lenders could expect average (30%-50%) recovery in the event of payment default or bankruptcy, remains unchanged.

"The upgrade reflects our view that the company will not sustain a more aggressive financial profile over the next two-three years, and that it will continue to generate sufficient, stable free cash flow to fund shareholder dividends and contract-supported capital projects, such as the new 1,000 bed Ravenhall, Australia facility," S&P credit analyst Rodney Olivero said in a news release.

"Also, we do not believe the company will engage in speculative building projects as we do not believe U.S. federal, state, and local governments' use of private prison operators will rise above 10% of the total U.S. prison population over the next two-three years."

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