Care UK’s credit rating takes a hit


Care UK Health & Social Care Investments’ credit ratings have taken a hit this week as its full-year financial forecast tightens.

Moody’s Investors Services has downgraded the company’s Corporate Family Rating (CFR) and Probability of Default Rating to Caa1 and Caa1-PD from B3 and B3-PD respectively.

At the same time, Moody’s has downgraded to Caa1 from B3 the rating of the Senior Secured Floating Rate Notes and to Caa3 from Caa2 the rating of the Senior Subordinated Second Lien Notes, both of which are issued by Care UK Health & Social Care PLC.

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The downgrade reflects Moody’s expectation that earnings through the remainder of FY2016 will contract as a result of ISTC (Independent Sector Treatment Centres) Wave 2 programme renewals within the company’s healthcare division.

Under the programme, more ISTCs will be opened in the UK, but Moody’s believes that occupancy levels in new homes are growing at “slower than forecast” rates.

“While we recognise the expectation that newly developed and restructured properties will provide a greater contribution to earnings as their trading activity and occupancy levels mature, we also believe that vulnerabilities to EBITDA generation have been experienced and continue to exist,” said Tim Snow, vice president and senior analyst for the Corporate Finance Group at Moody’s Investors Service.

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