Analysts at Moody's Investors Service on Thursday said they have downgraded the debt of CoreCivic because of the Biden administration’s push to end federal contracts with private prison managers.
Moody’s now rates CoreCivic’s debt Ba2, down from Ba1 — which is the first level below investment grade on the company’s scale. In their note to clients, the analysts also say their outlook on the Brentwood-based company is now negative due to the “substantial uncertainty” around its federal business and the likelihood that future debt it takes on will on the whole be more expensive than its current debt.
CoreCivic gets 51 percent of its revenues from three federal agencies — 2 percent from the Federal Bureau of Prisons, 21 percent from the U.S. Marshals Service and 28 percent from Immigration and Customs Enforcement. As those contracts expire over time, Moody’s analysts say CoreCivic and its peers could become property sellers or landlords to meet the government’s needs for beds.
Shares of CoreCivic (Ticker: CXW) rose 1.4 percent to $8.63 Thursday. They are up slightly over the past six months.
This post originally appeared in our partner publication, the Nashville Post.