Moody's introduces new ratings

Moody's Investors Service has introduced two new ratings: probability-of-default ratings and loss-given-default ratings.

The agency's current long-term credit ratings are opinions about expected credit loss that incorporate both the likelihood of default and the expected loss in the event of default. The loss-given-default rating methodology will disaggregate these two key assessments in long-term ratings. The agency said the methodology will also enhance the consistency in its notching practices across industries and will improve the transparency and accuracy of its ratings, as Moody's research shows that credit losses on bank loans have tended to be lower than those for similarly rated bonds.

Probability-of-default ratings are assigned only to issuers, not specific debt instruments, and use the standard Moody's alpha-numeric scale. They express Moody's opinion of the likelihood that any entity within a corporate family will default on any of its debt obligations.

Loss-given-default assessments (or LGDs) are assigned to individual rated debt issues - loans, bonds and preferred stock - and express Moody's opinion of expected loss as a percent of principal and accrued interest at the resolution of the default, with assessments ranging from LGD1 (loss anticipated to be 0%-9%) to LGD6 (loss anticipated to be 90%-100%).

Below is a list of the rating actions for Moody's rated companies in the health care services and distribution industry. The rating immediately after the company name denotes the corporate family rating and the percentages next to the LGDs represent the expected loss-given-default rates.

Butler Animal Health Holding Co., LLC, B2; probability-of-default rating: B2; first-lien revolver and term loan, upgraded to B1 from B2, 42%; second-lien term loan, Caa1, LGD5, 86%.

CCS Medical, Inc., Caa1; probability-of-default rating: Caa1; first-priority revolver and term loan, upgraded to B3 from Caa1, LGD3, 33%; second-priority term loan, upgraded to Caa2 from Caa3, LGD5, 81%.

CRC Health Corp., B2; probability-of-default rating: B2; revolver and term loan, upgraded to Ba3 from B1, LGD2, 29%; notes, Caa1, LGD5, 84%.

FHC Health Systems, Inc., B2; probability-of-default rating: B2; second-lien term loan, B2, LGD3, 48%; third-lien term loan, Caa1, LGD5, 88%.

Hanger Orthopedic Group, Inc., B3; probability-of-default rating: B3; revolver and term loan, upgraded to B1 from B2, LGD2, 25%; notes, downgraded to Caa2 from B3, LGD5, 80%.

InSight Health Services Corp., B3; probability-of-default rating: B3; senior secured notes, upgraded to B1 from B3, LGD2, 27%; senior subordinated notes, Caa2, LGD5, 83%.

MQ Associates, Inc., Caa1; probability-of-default rating: Caa1; discount notes, upgraded to Caa3 from Ca, LGD6, 90%. MedQuest, Inc., revolver and term loan, upgraded to B1 from Caa1, LGD2, 11%; senior subordinated notes, upgraded to Caa1 from Caa3, LGD4, 56%.

MultiPlan, Inc., prospective B2; probability-of-default rating: prospective B2; revolver and term loans, upgraded to B1 from B2, LGD3, 38%; senior subordinated notes, prospective Caa1, LGD6, 90%.

National Mentor, Holdings, Inc., B2; probability-of-default rating: B2; revolver, term loan and synthetic letter-of-credit facility, B1, LGD3, 33%; notes, downgraded to Caa1 from B3, LGD5, 88%.

RadNet Management, Inc. (Pro forma), B3; probability-of-default rating: B3; revolver and term loan, upgraded to prospective B1 from prospective B2, LGD2, 29%; second-lien term loan, downgraded to prospective Caa2 from prospective Caa1, LGD5, 83%.

RadNet Management, Inc. (Current), B3; probability-of-default rating: B3; revolver and term loan, upgraded to Ba3 from B3, LGD2, 22%; second-lien term loan, Caa1, LGD5, 71%.

Rotech Healthcare, Inc., Caa2; probability-of-default rating: Caa2; revolver and term loan, upgraded to B1 from B2, LGD2, 11%; notes, Caa3, LGD4, 67%.

Rural/Metro Corp., B2; probability-of-default rating: B2; senior discount notes, Caa1, LGD6, 92%. Rural/Metro LLC, revolver and term loan, upgraded to Ba2 from B1, LGD2, 15%; notes, B3, LGD4, 63%.

Sheridan Holdings, Inc., B2; probability-of-default rating: B2; revolver and first-lien term loan, upgraded to B1 from B2, LGD3, 34%; second-lien term loan, Caa1, LGD5, 87%.

Spheris Inc., B3; probability-of-default rating: B3; revolver and term loan, upgraded to Ba3 from B3, LGD2, 17%; notes, upgraded to Caa1 from Caa2, LGD5, 75%.

Team Finance LLC, B2; probability-of-default rating: B2; revolver and term loan, upgraded to B1 from B2, LGD3, 34%; notes, Caa1, LGD5, 87%.

TLC Health Care Services, Inc., B2; probability-of-default rating: B2; TLC Funding Corp., B2, revolver and first-lien term facility, upgraded to B1 from B2, LGD3, 35%; second-lien term facility, Caa1, LGD5, 88%.

VWR International, Inc., B2; probability-of-default rating: B2; term loans and revolver, upgraded to Ba3 from B2, LGD2, 24%; notes, B3, LGD4, 67%. CDRV Investors Inc., notes, Caa1, LGD6, 90%.

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