Fitch rates Tenet notes B-

Fitch Ratings said it assigned a B- with recovery rating of RR5 to Tenet Healthcare Corp.’s $500 million senior unsecured notes due 2019.

The proceeds will be used to refinance existing debt, fund recent acquisitions and general corporate purposes, Fitch said.

The agency also said it affirmed Tenet’s existing ratings, including its B issuer default rating.

The outlook is stable.

The acquisition of Vanguard Health Systems left Tenet with one of the most highly leveraged balance sheets in the for-profit hospital industry, the agency said.

The all-cash transaction added about $4.3 billion of debt to the balance sheet, Fitch said.

Fitch said it projects total-debt-to-EBITDA of 5.8x at the end of 2014, about a full turn of EBITDA more than the 4.7x level prior to the acquisition.

Opportunities for the company to reduce leverage through debt repayment are limited since Tenet generates negative free cash flow, the agency added.

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