Moody’s gives CHS/Community Health notes Caa1

Moody’s Investors Service assigned a Caa1 rating to CHS/Community Health Systems, Inc.'s new senior secured notes.

The agency said it expects Community to use proceeds from the $1.6 billion issuance to repay term loan borrowings and cover transaction costs.

There is no change to Community's existing ratings, including its Caa3 corporate family rating or Caa3-PD probability of default rating.

There is also no change to the existing Caa1 rating on the senior secured first-lien debt, Ca rating on the senior secured junior-lien debt, and C rating on the unsecured debt.

Finally, there is no change to Community's speculative grade liquidity rating of SGL-4 or the stable outlook.

Moody’s said the ratings reflect a view that Community's liquidity will be weak over the next 12 to 18 months, elevating the probability of a default event.

The ratings also reflect Community's very high financial leverage with debt/EBITDA over 8x, and the on-going significant interest costs and capital requirements of the business, the agency added.

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