Moody's rates Select Medical loan Ba2

Moody's Investors Service said it assigned a Ba2 (LGD2, 14%) rating to Select Medical Corp.'s amended senior secured revolving credit facility due August 2013 and affirmed the company's senior secured term loan tranche B-1 due 2014 and senior secured term loan due 2012 at Ba2 (LGD2) and its 7 5/8% senior subordinated notes due 2015 at B3 (LGD4). The loss-given-default rate was changed to 14% from 17% for the term loans and to 62% from 66% for the notes.

The agency also affirmed Select Medical Holdings Corp.'s corporate family and probability of default ratings at B2, senior floating-rate notes due 2015 at Caa1 (LGD6, 90%) and speculative grade liquidity rating at SGL-2.

The outlook was changed to stable from positive.

The agency said the outlook change reflects its expectation that a combination of risks and uncertainties facing the company over the near term make an upgrade less likely over the next few quarters but does not preclude positive rating action if these issues are resolved or addressed.

The B2 corporate family rating reflects considerable financial leverage, Moody's said, but notes improvement as debt levels were reduced with proceeds from the company's initial public offering of stock.

The rating also considers Select's considerable scale and position as one of the largest long-term acute care hospital and outpatient rehabilitation providers in the United States, the agency said.

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