S&P rates Vanguard Health loans B+

Standard & Poor's said it assigned a B+ rating to Vanguard Health Systems Inc.'s proposed $765 million senior secured term loan maturing in 2016 and $260 million revolving credit facility maturing in 2015 with 2 recovery rating.

The agency assigned a CCC+ rating to the company's proposed $1 billion senior unsecured notes with 6 recovery rating and affirmed the B corporate credit rating.

The outlook is stable.

S&P said the speculative-grade ratings reflect a relatively undiversified portfolio of hospitals and a highly leveraged financial risk profile.

Ratings also reflect the competitive nature of these markets, the company's vulnerability to local economic circumstances and reimbursement risk tied to ongoing third-party payor efforts to limit health care cost increases, the agency said.

Lease-adjusted debt-to-EBITDA ratio fell to 5.6x as of September 2009 from 6.6x as of June 2006.

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