Fitch rates WellPoint notes BBB+

Fitch Ratings said it assigned a BBB+ rating to WellPoint Inc.'s $1.35 billion of senior convertible debentures due 2042. The notes are to be issued under Rule 144A of the Securities Act of 1933.

Proceeds will be combined with holding company cash and used for general corporate purposes, including funding a portion of WellPoint's acquisition of Amerigroup Corp., continuation of the company's share repurchase program and the repayment of debt.

WellPoint's ratings are supported by strong and generally stable historical operating performance, very strong competitive position and solid statutory capitalization of its operating subsidiaries, the agency said.

The ratings also reflect WellPoint's relatively high financial leverage, very strong competition in the commercial health sector, ongoing uncertainty around the ultimate effects of health reform legislation, and continued concerns related to unsustainable medical cost trends, the agency noted.

The outlook to could be revised to stable if the company makes substantial progress toward a return of financial leverage metrics to appropriate levels, including debt-to-EBITDA ratio of 2.2x or less, according to the agency.

The ratings could be upgraded if there is a material reduction in leverage, with a long-term period of debt to EBITDA below 1.8x, the agency added.

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