Analysts at S&P Global Ratings have greeted CVS Corp.’s upcoming nuptials with Aetna Inc. with a tsk tsk.
CVS executives said Monday that it expects to close on the Aetna deal tomorrow.
(Related: CVS Gets Final Approval to Acquire Aetna)
S&P has responded to that announcement by cutting Aetna’s long-term issuer credit rating to BBB, from A.
S&P said it cut Aetna’s rating partly because CVS has a rating of just BBB, and partly because CVS is “taking on significant debt and integration risks.”
“We believe CVS/Aetna’s vertically integrated health care strategy is ambitious and potentially game changing as it relates to the consumer experience and medical cost containment,” S&P said in the rating cut announcement. “However, we believe the near-term execution risks are meaningful, as this type of combination, at this scale, is new and forward-thinking.”
Aetna itself has a very strong business profile, strong earnings, and enough capital to qualify for an AA rating based solely on capital, S&P said.
— Read Dear Connecticut: CVS Can’t Afford Aetna. Sincerely, New York, on ThinkAdvisor.