Moody's upgrades Rotech

Moody's Investors Service said it upgraded Rotech Healthcare, Inc.'s corporate family and probability-of-default ratings to Caa1 from Caa2 following the execution of $230 million of senior secured notes due 2015.

In addition, Moody's upgraded Rotech's senior subordinated notes rating to Caa2 (LGD5, 77%) from Caa3 (LGD5, 79%) and confirmed the B1 rating (LGD2, 19%) on the senior secured notes.

The outlook is stable. The actions conclude the review for upgrade begun on Sept. 27.

Moody's said the Caa1 corporate family rating reflects concerns regarding refinancing risk, specifically, the November 2011 maturity of the majority of Rotech's senior subordinated notes ($287 million outstanding).

The company also operates in an industry with significant Medicare reimbursement cuts in the past and continued uncertainty around the reimbursement environment, the agency said.

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