S&P Global Ratings lowered its long-term rating to 'B+' from 'BB' on the City of Oroville, Calif.'s series 2019 revenue bonds, issued for Oroville Hospital (Oroville). The outlook is negative. The lower rating reflects significant deterioration in Oroville's financial profile, particularly unrestricted reserves, through the six-month interim ended May 31, 2021, coupled with an already highly leveraged balance sheet. Unrestricted reserves, excluding Medicare Advance Payment (MAP) funds, have declined to 22 days' cash on hand and 8% reserves to long-term debt as of May 31, 2021. While management expects underlying reserves to improve by year-end, assuming cash flow continues to improve, and does not expect any near-term covenant violations as it relates to balance sheet metrics given access to MAP
