U.S.-based hospital operator Community Health Systems Inc. has announced a proposed exchange offer for its unsecured notes due 2022, offering to exchange the existing 2022 notes for a mix of new senior secured and senior unsecured notes of longer tenure. Although the exchange is being offered at par, we consider the exchange as a distressed transaction given the proposed maturity extension and materially below market interest rate offered given current market trading levels for Community's unsecured debt. We are lowering the issuer credit rating to 'CC' from 'CCC+', and the issue-level rating on the senior unsecured notes due 2022 to 'CC' from 'CCC-' to reflect our view that this transaction, if completed, results in investors receiving less than the original
