CoreCivic (NYSE:CXW) bonds received an upgrade from the corporate bond research firm Gimme Credit, with their rating improving from stable to improving. This adjustment reflects a positive shift in the firm's assessment of the company's financial health.
The upgrade was attributed to an updated model, which anticipates that CoreCivic's leverage in 2024 will decrease moderately due to continued debt reduction efforts. Gimme Credit has accordingly raised CoreCivic's credit score to 1 from 0, indicating a more favorable credit outlook for the company.
CoreCivic's recent performance has shown its occupancy rates and operating margins are on a path to recovery, approaching the levels seen before the COVID-19 pandemic. The company has also confirmed its commitment to using its free cash flow primarily for reducing debt, while also engaging in opportunistic share buybacks when suitable.
The analysis by Gimme Credit also noted that the fundamentals of the private prison industry appear promising through the current Presidential election cycle, with the potential for continued positivity in the event of an administrative change. This outlook is underpinned by the expectation that CoreCivic will continue to reduce its leverage, which is anticipated to contribute to the company's financial stability in the near future.
Investors and market watchers will likely monitor CoreCivic's financial strategies and industry conditions closely, as the company works towards improving its leverage and capital structure in the coming years.