Moody's cuts HCA debt

Moody's Investors Service said it downgraded the senior secured debt of HCA Inc. to Ba3 (LGD 3, 32%) from Ba2 (LGD 2,27%) reflecting the increase in the amount of secured debt in the capital structure and the expected increase in the amount of second-lien debt to be called as a result of the upsizing of a note offering.

Moody's also affirmed HCA's B1 corporate family and probability of default ratings along with the Ba1 (LGD 1, 1%) rating on its ABL revolver due 2012, the B2 (LGD 4, 67% from 65%) rating on its $3.2 billion second-lien notes due 2016, $201.5 million of second-lien notes due 2017 and $1.5 billion of second-lien PIK notes due 2016 and the B3 (LGD 5, 85% from 88%) rating on its senior unsecured notes.

Moody's rated the company's offering of senior secured notes Ba2 (LGD 2, 27%) and unsecured notes B3 (LGD 5, 88%) based on the initial offering size of $1 billion in total debt.

The downgrade of HCA's senior secured debt to Ba3 follows the announcement that the company placed $3 billion of senior secured notes due 2020 and $2 billion of unsecured notes due 2022, the agency said.

Proceeds of the offering are now expected to fund the call of all of the company's second-lien notes due 2016.

HCA's ratings reflect the expectation that the company will continue to operate with significant leverage as well as the company's large debt maturities in future periods, the agency said. The ratings also reflect HCA's scale and position as the largest for-profit hospital operator.

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