Moody's lifts Skilled Healthcare view to positive

Moody's Investors Service said it changed Skilled Healthcare Group, Inc.'s outlook to positive from stable and affirmed the B2 corporate family and probability-of-default ratings and SGL-2 speculative grade liquidity rating.

The agency also downgraded the senior secured revolving credit facility due 2010 and senior secured first-lien term loan due 2012 to B1 (LGD3, 34%) from Ba3 (LGD2, 27%), affirmed the senior subordinated notes due 2014 at Caa1 (LGD5) and changed the loss-given-default rate assigned to the notes to 87% from 82%.

The agency said the positive outlook reflects the expectation that financial leverage will be reduced following the anticipated use of proceeds from a recent public equity offering to repay debt and from continued revenue and EBITDA growth.

The downgrade of the senior secured credit facilities reflects the decrease in the amount of loss absorption below the senior secured credit facilities and the increase in the proportion of the capital structure comprised of senior secured debt resulting from the repayment of a portion of the senior subordinated notes and the increase in the size of the company's revolver to $100 million from $75 million, Moody's said.

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