S&P upgrades Vanguard Health

Standard & Poor's said it raised Vanguard Health Holding Co. II LLC's $815 million senior secured term loan due 2016 and $260 million revolving credit facility due 2015 to BB- from B+ and its $1.18 billion senior unsecured notes, including the $225 million add-on, to B- from CCC+. The recovery rating was changed to 1 from 2 for the loans and to 5 from 6 for the notes.

The B corporate credit rating was affirmed, and the outlook is stable.

The agency said it raised the ratings because its estimate of the value of the company in a default scenario, including the acquisition of the Detroit Medical Center, has improved.

The speculative-grade ratings on Vanguard continue to reflect its relatively undiversified portfolio of hospitals, highly leveraged financial profile, vulnerability to local economic circumstances and the reimbursement risk tied to ongoing third-party payor efforts to limit health-care cost increases, S&P added.

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