A.M. Best Co. has assigned a debt rating of “bb” to the $175
million 5.75% senior unsecured notes due 2017 and issued in November
2012 of Centene Corporation (Centene) (headquartered in St.
Louis, MO) (NYSE: CNC). The assigned outlook is stable.
The notes are an add-on to the existing 5.75% senior notes that will
mature in 2017. The new notes were priced at 5.75% with a yield to
maturity of 4.288%. Including the add-on debt, the total debt issued
under this series originally issued in May 2011 is $425 million. The
majority of the proceeds have been used for capitalizing Centene’s
managed care subsidiaries in support of the growth in its statutory
revenues over the past year as contracts have been renewed and growing
and new business have been added. The new debt levels will drive the
debt-to-capital percentage on a pro-forma basis higher to a range of
approximately 31% from 29.2% at the quarter ending September 30, 2012.
Centene has additional financial flexibility in its $400 million credit
The methodology used in determining these ratings is Best’s Credit
Rating Methodology, which provides a comprehensive explanation of A.M.
Best’s rating process and contains the different rating criteria
employed in the rating process. Best’s Credit Rating Methodology can be
found at www.ambest.com/ratings/methodology.
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