S&P cuts Rotech

Standard & Poor's said it lowered its rating on Rotech Healthcare Inc. to CCC- from B.

The agency said it also lowered its issue-level rating on its $230 million first-lien notes to CCC+ from BB-. The recovery rating on the notes is 1, indicating an expectation for a very high recovery of principal in the event of payment default.

At the same time, the agency said it also lowered its issue-level rating on Rotech's $290 million second-lien notes to CCC- from B. The recovery rating on the second-lien notes is a 4, indicating an expectation for average recovery of principal in the event of payment default.

S&P said the downgrade results from Rotech's weak liquidity position, highlighted by its high cash burn rate.

"The ratings reflect Rotech's highly leveraged financial risk profile, dominated by its weak liquidity position, high debt burden and overall sensitivity of credit metrics to the uncertain reimbursement environment," said S&P credit analyst Tahira Wright in a news release.

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