Moody's rates Community Health loan Ba3

Moody's Investors Service said it assigned a Ba3 (LGD 3, 32%) rating to CHS/Community Health Systems, Inc.'s proposed $500 million term loan A due 2016 and new $700 million revolving credit facility due 2016.

The proceeds of the term loan A will be used to reduce the amount of the outstanding term loan B due 2013 and the new revolver will replace the company's existing $750 million revolver set to expire in 2013.

The B1 corporate family and probability of default ratings remain unchanged.

The new term loan A and revolver, along with the recent extension of the maturity of an additional $1.6 billion in term loan B, will increase interest cost but are not expected to increase Community Health's leverage and improves the company's maturity profile, the agency said.

The outlook remains negative.

The ratings reflect an expectation that leverage will remain high and interest expense coverage will continue to be modest, Moody's said.

The agency said it anticipates that the opportunity to reduce leverage with free cash flow will be constrained in the near term given the company's expected investment in capital spending related to replacement hospitals and information technology.

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