Community Health Drowns on Distressed Exchange

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On December 9, 2020, S&P Global Ratings lowered its issuer credit rating on Community Health Systems, Inc. to SD (selective default) from CC, its 6.875% notes due in 2028 rating to D from CC and its junior-priority secured notes due in 2023 and 2024 rating to CCC- from CC. The downgrade follows Community's exchange of $700 million of the $1.476 billion outstanding on its senior unsecured notes due in 2028 for $400 million cash and 10 million in new common shares. At $8.43 per share as of December 8, the total value of the consideration is about $484 million, or a 30% discount. The ratings agency views the transaction as distressed because of the large discount and because the amount of debt being exchanged is significant.

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