Rating agencies, A.M. Best Co., Standard & Poor's Ratings
Services (S&P) and Moody's Investor Services of
) have assigned debt ratings to the newly issued senior unsecured
). While Moody's assigned a "Baa2" rating to the notes with a
stable outlook, S&P rated these with an "A-". Additionally, A.
M. Best rated the notes "bbb+" and placed these under review with
AMERIGROUP CORP (AGP): Free Stock Analysis
CITIGROUP INC (C): Free Stock Analysis Report
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DEUTSCHE BK AG (DB): Free Stock Analysis Report
MOODYS CORP (MCO): Free Stock Analysis Report
WELLPOINT INC (WLP): Free Stock Analysis Report
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The financial strength ratings (FSR), issuer credit ratings (ICR)
and existing debt ratings of WellPoint were also placed under the
review, with a negative outlook, by A. M. Best in July 2012. These
ratings were placed under review following the company's
announcement of a deal to acquire
) and are expected to remain under review till the closure of the
deal. Meanwhile, A.M. Best will continue evaluating WellPoint's
operating results, capitalization level, capital structure and
other relevant metrics, which affect the company's ratings.
The Amerigroup acquisition is also the reason behind the issuance
of these notes. Earlier this week, WellPoint issued 1.25% senior
unsecured notes due 2015 worth $625 million, 1.875% senior
unsecured notes due 2018 worth $625 million, 3.30% senior unsecured
notes due 2023 worth $1 billion and 4.65% senior unsecured notes
due 2043 worth $1 billion to partly finance the acquisition.
Credit Suisse Group
Deutsche Bank AG
) acted as the book-running managers for the sale.
The $4.9 billion acquisition deal was announced in July this year.
WellPoint will pay $92.00 per share to buy all the outstanding
shares of Amerigroup. This reflects a 43% premium on Amerigroup's
closing price of $64.34 on July 6. Apart from the proceeds from the
issue of the new notes, WellPoint will fund the purchase with its
cash reserves and additional borrowings via commercial papers.
WellPoint currently carries a Zacks #4 Rank, which translates into
a short-term Sell rating. We maintain a long-term 'Neutral' rating
on its shares.