Moody's lowers CHG Healthcare

Moody's Investors Service said it affirmed CHG Healthcare Services' B2 corporate family rating and B2-PD probability of default rating.

Moody's also said it downgraded CHG's senior secured first-lien credit facility rating to B2 from B1 following the announced refinancing transaction, which removes second-lien debt from the capital structure and replaces it with incremental first-lien debt.

The outlook is stable.

CHG is proposing to raise an additional $270 million in incremental first-lien term loan, the agency said.

The proceeds from this incremental add on, along with around $8 million in cash, will be used to repay the entire $260 million second-lien term loan, accrued interest and estimated fees, Moody's said.

The downgrades reflect the elimination of a layer of loss absorption below the senior secured first-lien credit facilities, resulting from the repayment of the entire $260 million second-lien term loan, the agency said.

The first-lien debt will represent the preponderance of the company's obligations following the proposed transaction, Moody's said.

The refinancing transaction is credit positive, the agency said.

The refinancing will result in material cash interest savings, which will benefit cash flow and interest coverage metrics, Moody's said.

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