Moody's ups, rates Mednax notes Ba3

Moody's Investors Service said it upgraded Mednax, Inc.'s corporate family rating to Ba3 from B1 and probability of default rating to Ba3-PD from B1-PD. The agency also assigned a Ba3 rating to the company's planned $400 million of unsecured notes due in 2030. The speculative grade liquidity rating remains unchanged at SGL-1. Moody’s revised the outlook to stable from positive.

"The rating upgrade reflects a material improvement in Mednax's financial metrics and Moody's expectation that the financial leverage will remain moderate as the company refocuses on its core pediatrics and obstetrics businesses," stated Kailash Chhaya, a Moody's vice president and the lead analyst for Mednax, in a press release. "The proposed refinancing transaction will not only reduce the company's total debt by approximately $250 million but also reduce the debt servicing cost going forward," added Chhaya.

As part of the refinancing, the company will retire its $1 billion of unsecured notes due 2027 and pay transaction expenses with a combination of an unrated $250 million unsecured term loan A, the new unsecured notes, a $100 million draw on its unrated revolver and $305 million internal cash.

Moody's said it forecasts Mednax’s leverage will decline by at least 1x from an estimated 4.2x at the end of Sept. 30, 2022, on improved earnings and a reduction in total debt.

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