S&P assigns HCA notes BBB-

S&P said it assigned its BBB- issue-level rating (two notches above the corporate credit rating) to HCA Inc.'s proposed $1 billion 10.5-year senior secured notes, which are being issued to refinance the company's term loan B-4 maturing in 2018.

The agency assigned a 1 recovery rating to this debt, indicating an expectation of very high (90% to 100%) recovery for lenders in the event of a payment default.

The issue-level ratings are the same as the ratings on the existing senior secured debt.

HCA’s BB corporate credit rating reflects S&P’s view that its scale relative to other health care services peers should allow the company to better offset declining reimbursement rates with cost reduction efforts and that its scale and market presence should aid in contract negotiations with commercial payors, the agency said.

In addition, HCA's business is diversified beyond inpatient hospital services, with about 38% of revenues coming from outpatient procedures.

These factors are only partially offset by the agency’s view that HCA is exposed to reimbursement pressure as government and commercial payors seek to control costs, and its business is geographically concentrated in two states, Texas and Florida, which together represent about half of the company's revenues, according to S&P.

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