Moody's Cuts Corrections Corp. (CXW) to 'Ba1'; Outlook Lowered to Negative
- Donald Trump Sworn in as 45th U.S. President
- Wall Street ends higher as Trump becomes president
- Walgreens Boots Alliance (WBA) Said to Face Antitrust Concern for Rite Aid (RAD) Fix - Bloomberg
- Bristol-Myers Squibb (BMY) Says It Won't Pursue Accelerated U.S. Regulatory Pathway for Opdivo Plus Yervoy in Lung Cancer
- Apple (AAPL) Sues Qualcomm (QCOM) Over Patent Royalties in Antitrust Case - Bloomberg
Get access to the best calls on Wall Street with StreetInsider.com's Ratings Insider Elite. Get your Free Trial here.
Moody's Investors Service downgraded the senior unsecured rating of Corrections Corporation of America (NYSE: CXW)(CCA) to Ba1 from Baa3, as a result of the August 18, 2016 announcement by the U.S. Justice Department plans to phase out its use of privately-operated prisons. The rating outlook was revised to negative from stable.
The following ratings were downgraded:
Corrections Corporation of America -- senior unsecured rating to Ba1, from Baa3, senior unsecured debt shelf to (P)Ba1, from (P)Baa3.
The rating actions and the negative outlook reflects the substantial uncertainty regarding the ultimate effect that the Department of Justice announcement will have on the REITs cash flows. Moody's notes that as of June 30, 2016 the federal bureau of prisons represented approximately 9% of the entity's revenues. However, the steep decline in the REIT's stock price has closed this capital market access at least in the short term.
Upward rating movement will be unlikely in the medium term and will require more clarity on the full effect of this announcement to the REIT's cash flows.
Downward rating pressure would occur from continued adverse events, such as litigation or publicity related to private prison management and it's utilization by state and federal authorities, leading to a loss of market share in private prison ownership and management. Furthermore, contract non-renewals resulting in total occupancy losses of 10% or more and declining margins would also lead to downward rating pressure.
Moody's last rating action with respect to CCA was on June 11, 2015 when Moody's upgraded the senior unsecured rating of Corrections Corporation of America to Baa3 from Ba1. The rating outlook was stable.
Serious News for Serious Traders! Try StreetInsider.com Premium Free!
You May Also Be Interested In
- CoreCivic Provides Tax Allocations of 2016 Dividend Distributions
- Skyworks Solutions (SWKS) PT Raised to $105 at Oppenheimer Following 1Q Report
- Checkpoint Software (CHKP) PT Raised to $94 at Stifel Following 4Q Beat
Create E-mail Alert Related CategoriesCredit Ratings
Related EntitiesMoody's Investors Service
Sign up for StreetInsider Free!
Receive full access to all new and archived articles, unlimited portfolio tracking, e-mail alerts, custom newswires and RSS feeds - and more!