Back to top

Analyst Blog

Rating agencies, A.M. Best Co., Standard & Poor’s Ratings Services (S&P) and Moody’s Investor Services of Moody's Corp. (MCO - Analyst Report) have assigned debt ratings to the newly issued senior unsecured notes of WellPoint Inc. (WLP - Analyst Report). 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 negative implications.

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 Amerigroup Corporation 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. According to Reuters, Citigroup Inc. (C - Analyst Report), Credit Suisse Group (CS - Snapshot Report) and Deutsche Bank AG (DB - Analyst Report) 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.

Please login to or register to post a comment.

New to Zacks?

Start Here

Zacks Investment Research


Are you a new Zacks Member or a visitor to

Top Zacks Features

My Portfolio Tracker

Is it Time to Sell?

One of the most important steps you can take today is to set up your portfolio tracker on Once you do, you'll be notified of major events affecting your stocks and/or funds with daily email alerts.

More Zacks Resources

Zacks Rank Home - Evaluate your stocks and use the Zacks Rank to eliminate the losers and keep the winners.

Mutual Fund Rank Home - Evaluate your funds with the Mutual Fund Rank for both your personal and retirement funds.

Stock/Mutual Fund Screening - Find better stocks and mutual funds. The ones most likely to beat the market and provide a positive return.

My Portfolio - Track your Portfolio and find out where your stocks/mutual funds stack up with the Zacks Rank.

Zacks #1 Rank Top Movers for Zacks #1 Rank Top Movers

Company Symbol Price %Chg
SUPER MICRO… SMCI 27.00 +10.25%
CANADIAN SO… CSIQ 38.34 +8.18%
CENTURY ALU… CENX 26.97 +7.97%
WILLDAN GRO… WLDN 11.38 +5.86%
AROTECH COR… ARTX 3.78 +5.59%