U.S. pharmacy services and drugstore retailer CVS Health Corp. is issuing senior unsecured notes to partly fund the purchase of health insurance provider Aetna Inc. All debt will be issued at the CVS parent company level. CVS' financial risk profile will weaken considerably from the significant increase in debt, with pro-forma adjusted debt to EBITDA increasing to about 4.5x from 2.9x prior. We are lowering our rating on CVS to 'BBB' from 'BBB+' and affirming our 'A-2' short-term and commercial paper ratings. We are assigning our 'BBB' issue-level rating to the proposed acquisition-related notes. The outlook is stable reflecting our expectation that CVS will pay down debt, resulting in leverage improving to the low-4x area within one year from closing.
