CHS debt swap plan is unsustainable, Moody's says

Although Franklin, Tenn.-based Community Health System's proposed debt exchange plan will alleviate short-term liquidity concerns, it will also add to an already unsustainable capital structure, Moody's Investors Service said Nov. 4

On Oct. 29, CHS said it plans to offer $700 million in new senior secured notes due in 2027 and up to $1.9 billion in senior unsecured notes due in 2028 in exchange for its $2.6 billion worth of outstanding senior unsecured notes due in 2022.

The plan would increase how much CHS pays in interest.

Moody's didn't alter the health system's current "Caa3" rating in its public comment about the debt swap plan, but said if the plan moves forward it would likely result in downward pressure on some of its ratings.

"If the transaction is completed in its proposed form, the addition of incremental first lien debt will likely result in downward pressure on the existing senior secured first lien ratings of 'Caa1,'" Moody's said.

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