The unsecured notes CHS is proposing an exchange for are $1.93 billion due 2019, $1.2 billion due 2020 and $3 billion due 2022.
Fitch views the potential move as a distressed debt exchange. Per Fitch’s criteria, the issuer default rating would be downgraded to “C” upon commencement of the offer and to “restricted default” upon completion of the debt exchange.
The rating watch negative also takes into account that CHS could not complete the transaction, which could mean heightened credit pressure as the November 2019 due date quickly approaches.
CHS’s bank loans and senior secured notes are not affected by the rating watch negative.
Fitch attributed its rating watch negative designation and “CCC” rating to several factors, including CHS’s very high debt burden, increasing pressure as acute-volume declines nationwide and persistently weak operating trends.
Read the full rating watch negative decision here.
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