Tuesday, June 01, 2021

The GEO Group, Inc. (GEO)
Is the Debt Downgrade Warranted?

With over 94,000 beds owned, leased or managed across its business lines and serving over 260,000 people daily, GEO is a leading provider of mission critical real estate to its governmental partners. The Company is the first fully integrated equity REIT specializing in the design, financing, development, and operation of secure facilities, processing centers, and community reentry centers in the U.S., Australia, South Africa, and the U.K.

Joe Gomes, Senior Research Analyst, Noble Capital Markets, Inc.

Refer to the full report for the price target, fundamental analysis, and rating.

S&P Downgrade. Last week, S&P downgraded GEO Group to CCC+ from B. Senior secured debt was lowered to B from BB- and senior unsecured debt was dropped to CCC from B-. The ratings agency cited weaker and “increasingly complex” operating conditions, significant debt maturities in 2024, unsupportive capital markets, and the hiring of “restructuring advisors,” among the reasons for the downgrade.


But What Has Changed? Not much, in our opinion, since S&P’s previous downgrade in March.  Yes, GEO announced the hiring of Skadden Arps and Lazard to assist with the review of various capital structure alternatives, but we view this step as prudent management by the BoD and would note that CoreCivic took exactly the same measures last year when that Company performed its capital structure review …

This Company Sponsored Research is provided by Noble Capital Markets, Inc., a FINRA and S.E.C. registered broker-dealer (B/D).

*Analyst certification and important disclosures included in the full report. NOTE: investment decisions should not be based upon the content of this research summary.  Proper due diligence is required before making any investment decision.