Moody's may cut Select Medical

Moody's Investors Service said it placed the Ba2 rating on the senior secured debt of Select Medical Corp., a wholly owned subsidiary of Select Medical Holdings Corp., under review for downgrade.

The review follows Select Medical's announcement that the company has initiated discussions regarding an incremental extension of credit under its senior secured credit facility.

The remaining ratings on Select Medical, including its B1 corporate family and probability of default ratings, are not under review and remain unchanged. However, LGD assessments on other debt instruments could be adjusted once the proposed transaction closes.

The agency said the possible downgrade of the senior secured debt, which Moody's expects would be only one notch, reflects the increase in the senior secured claim in the capital structure and corresponding decline in expected recovery as determined by the application of Moody's loss given default methodology.

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