Research Update: Community Health Systems Inc. Downgraded To 'CC' From 'CCC-' On Distressed Note Exchange; Outlook Negative

U.S.-based hospital operator Community Health Systems Inc. has announced the results of its three tender offerings for senior unsecured notes due in 2019, 2020, and 2022. As we previously noted, the maturities in 2019 and 2020 are tendered at par and as such we are not considering them distressed. We view the exchange of the 2022 notes as a distressed transaction because they are tendered at a material discount to par and because the amount that will be tendered is at a level we consider material. As a result, we are lowering the corporate credit rating to 'CC' from 'CCC-'. We are removing the corporate credit rating and the rating on the notes from CreditWatch. The outlook is negative reflecting

...+ U.S.-based hospital operator Community Health Systems Inc. has announced the results of its three tender offerings for senior unsecured notes due in 2019, 2020, and 2022. + As we previously noted, the maturities in 2019 and 2020 are tendered at par and as such we are not considering them distressed. + We view the exchange of the 2022 notes as a distressed transaction because they are tendered at a material discount to par and because the amount that will be tendered is at a level we consider material. + As a result, we are lowering the corporate credit rating to '##' from '###-'. + We are removing the corporate credit rating and the rating on the notes from CreditWatch. + The outlook is negative reflecting the likelihood we will lower the corporate credit rating to '##' at the close of the transaction and lower the rating on the notes due 2022 to 'D'....

Research Update