OREANDA-NEWS. S&P Global Ratings today placed its ratings, including the 'BB-' corporate credit rating, on Boca Raton, Fla.-based The GEO Group Inc. on CreditWatch with negative implications.

"The CreditWatch placement follows the DOJ's plan to reduce--and ultimately end--the use of private prisons to house the federal prison population," S&P Global Ratings analyst Brennan Clark said. "We currently believe these contemplated reductions will occur at the BOP, which will likely decline to renew expiring contracts over the next several years and absorb all inmate populations back into their own facilities."

S&P Global Ratings will resolve the CreditWatch placement following our review of the DOJ's plan and its potential negative effect on GEO over the next several years, including the expected revenue loss at BOP and possibly USMS; the potential for GEO's costs to increase given the DOJ's opinion that privately operated prisons compare poorly to BOP prisons in terms of services, safety, and costs; and the risk that other government customers could consider similar plans given the negative publicity. We will also take into account GEO's ability to market prisons that are exposed to non-renewal by one or more federal agencies to other government customers and prospective clients, its ability to preserve cash flow including potentially by lowering non-essential costs and reducing capital expenditures, and the political environment in conjunction with the upcoming elections. It's possible we could lower our ratings on GEO by one or more notches or affirm our ratings at the present level following our review.