S&P Global Ratings and Moody's both downgraded certain ratingson HCP Inc. following thecompany's recently announced plans to spinoff its HCR Manorcare portfolio into a publicly traded REIT.
Specifically, S&P Global lowered its corporate credit ratingon HCP to BBB from BBB+ and its issue-level rating on the company's senior unsecurednotes to BBB from BBB+.
The outlook is stable.
Concurrently, the agency removed the company from CreditWatch,where it had been placedwith negative implications.
S&P noted that HCP's recently elevated leverage, which isexpected to further increase with the spinoff, is reflected in the company's loweredratings. The leverage is expected to remain high for some years following the spinoff.
The stable outlook takes into consideration S&P Global'sview that the spinoff will be completed successfully.
Meanwhile, Moody's lowered its senior unsecured debt rating onHCP to Baa2 from Baa1 with the outlook revised to stable from negative.
Moody's also downgraded the company's senior unsecured shelfto (P)Baa2 from (P)Baa1, its senior unsecured medium-term note program to (P)Baa2from (P)Baa1 and its preferred stock shelf to (P)Baa3 from (P)Baa2.
Moody's noted that upon successful completion of the spinoff,HCP's leverage will increase further.
The stable outlook reflects Moody's belief that HCP will be "well-positionedin the Baa2 rating category," and that HCP will be able to successfully completethe spinoff and maintain ample liquidity.
S&P Global Ratingsand S&P Global Market Intelligence are owned by S&P Global Inc.