Moody’s rates Molina notes Ba3

Moody's Investors Service said it assigned a Ba3 senior debt rating to Molina Healthcare Inc.'s planned issuance of up to $330 million of senior debt due 2025. The outlook is negative.

Proceeds are expected to be used to prefund the repayment of the company’s 1.625% convertible senior notes due 2044 on or around their Aug. 20 put date.

The agency’s said Molina’s Ba2 rating is based primarily on the company's concentration in the Medicaid market, acquisitive nature, low margins and high level of financial leverage.

In Moody’s view, these negatives are offset by the company's multi-state presence and a non-regulated management information systems business.

The negative outlook on Molina reflects the agency’s view of potentially greater operational risks at the company and, secondarily, increased uncertainty on the impact of future health-care reform on the Medicaid market.

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