S&P rates Vanguard Health loans B+, notes CCC+

Standard & Poor's said it assigned a B+ rating to Vanguard Health Systems Inc.'s proposed $765 million senior secured term loan maturing in 2016 and $260 million revolving credit facility maturing in 2015. The recovery rating on these debt issues is 2, indicating an expectation for 70% to 90% recovery in the event of default. The agency also assigned a CCC+ rating to the company's proposed $1 billion senior unsecured notes with recovery rating of 6, indicating an expectation for 0% to 10% recovery. The agency also said it affirmed its corporate credit rating at B.

The outlook is stable.

The ratings reflect its undiversified portfolio of hospitals and a highly leveraged financial risk profile, S&P said.

The ratings also consider the company's vulnerability to local economic circumstances and reimbursement risk tied to ongoing third-party payor efforts to limit health care cost increases, the agency said.

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