$MPW (+0.22%) - couldn't find cause for the jump today.
Medical Properties Trust Announces Private Offering of Senior Secured Notes - but that's yesterday...
Anyone got better insights?
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Edit:
Guess I found a reason:
Moody's Ratings upgrades MPT's CFR to B3 and assigns B2 rating to new secured notes; outlook changed to stable
New York, January 29, 2025 -- Moody's Ratings (Moody's) today upgraded Medical Properties Trust, Inc.'s Corporate Family Rating (CFR) to B3 from Caa1 and Speculative Grade Liquidity Rating (SGL) to SGL-3 from SGL-4. In the same rating action, we assigned a B2 rating to the new USD and Euro-denominated backed senior secured notes being issued by its primary operating subsidiary, MPT Operating Partnership, LP's (collectively MPT or the REIT). We also affirmed MPT Operating Partnership, LP's backed senior unsecured debt rating at Caa1. The outlook has been revised to stable from negative.
Today's actions reflect our view that MPT's liquidity will improve with the issuance of the secured notes because the proceeds will be used to repay its 2025 and first half 2026 debt maturities, and a portion of the revolver draw. For the same reason, the speculative grade liquidity (SGL) rating was revised to SGL-3 (Adequate liquidity) from SGL-4 (Weak liquidity).
The stable outlook reflects our expectation that over the next 2-4 quarters MPT's operating cash flow will remain at about current levels and the REIT will maintain adequate liquidity.
RATINGS RATIONALE
MPT's B3 CFR reflects the REIT's tenant mix which includes hospital and other medical facility operators with weak credit profiles, high net debt to EBITDA leverage, and its modest fixed charge coverage. Although the REIT has re-tenanted the hospitals that were leased to the now bankrupt health system, Steward Health Care, to five other hospital operators in late 2024, the rent from the new operators is initially a fraction of the rent that was due under the contract with Steward, and will not be equivalent to that level until late 2026.
MPT's CFR also reflects its large scale and the geographic diversification in its portfolio. Its international properties, primarily in Europe, accounted for almost half its asset base at the end of the third quarter of 2024. The REIT invests in several types of hospitals and other healthcare facilities, including inpatient rehabilitation hospitals and behavioral health facilities, which serve different patient populations and have different reimbursement mechanisms. Adverse policy changes, such as a potential decrease in Medicaid funding or other actions that result in a higher uninsured population, could weaken the credit profile of some of MPT's tenants. The primary risk mitigant for the REIT is that rent accounts for a small share of its tenants' expenses.
With the new secured debt issuance, MPT would be able to address its $1.2 billion 2025 debt maturity, and its $669 million first half 2026 debt maturity. However, the materially higher interest cost for the new debt would weaken the REIT's fixed coverage ratio and its unencumbered asset ratio (unencumbered assets as a share of gross assets) would decline to the 50-60% range, depending on proceeds from the new issuance.
The B2 rating assigned to the secured debt issue, one notch above the CFR, reflects its collateral coverage. The Caa1 rating for the senior unsecured notes reflects their subordinate position in the new capital structure and the REIT's smaller unencumbered asset base after the secured debt issue.
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