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Bond Market News
CHS Downgraded to CCC+ by Fitch
December 11, 2023
Community Health Systems (CHS) has been downgraded by a notch to CCC+ from B- by Fitch. Fitch also downgraded CHS’s, first-lien senior secured, second-lien senior secured and senior unsecured notes by a notch to B+, CCC- and CC respectively. The downgrade comes on the back of reducing EBITDA and cash flow metrics for CHS in 2023 along with expectations of EBITDA leverage to rise above the 7-8x range. Though margins have improved for the company to 11.5-12% in 2023 from 10.5% in 2022, Fitch expects them to remain rangebound in near future. CHS has reduced its 2023 cash flow guidance from $675-825mn to $400-300mn for 2023. As a result, Fitch has lowered its expectations on free cash flow driving debt reduction in 2024-26 for the company.
CHS bonds traded flat with its 5.625% 2027s trading at 88.4, yielding 9.86%
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