S&P: Merger with CHI likely to trigger downgrade for Dignity Health

Englewood, Colo.-based Catholic Health Initiatives and San Francisco-based Dignity Health announced a definitive merger agreement Thursday. Although there is no immediate impact on the credit ratings of either health system, it is likely Dignity Health will be downgraded if the deal closes, according to S&P Global Ratings.

S&P downgraded CHI's rating to "BBB+" with a stable outlook in March. That same month, the debt rating agency affirmed Dignity Health's "A" rating with a negative outlook.

"We said at the time that, as the smaller and higher rated organization, Dignity Health would likely be downgraded as its overall financial profile would be initially diluted," S&P stated in a Dec. 7 bulletin. "We stand by that assessment."

S&P's rating outlook on CHI remains stable, as the merger would be beneficial to the health system's financial metrics.

S&P said it will likely update CHI and Dignity Health's respective ratings before the merger deal closes.

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