TEXT-S&P rates Tenet Healthcare notes 'B+'
Jan 22 - Standard & Poor's Ratings Services today assigned Dallas-based Tenet Healthcare Corp.'s proposed $850 million senior secured notes due 2021 its 'B+' issue-level rating (one notch above the 'B' corporate credit rating on the company). We also assigned the notes a recovery rating of '2', indicating our expectation for substantial (70% to 90%) recovery for lenders in the event of a payment default. The company plans to use the proceeds to refinance existing debt. The corporate credit rating on Tenet is 'B' and the outlook is stable. The rating reflects our view of the company's "weak" business risk profile, reflecting significant reimbursement risk and a hospital portfolio with some concentration risk in key markets that we view as competitive. We view Tenet's financial risk profile as "aggressive," reflecting leverage near 5x as well as the company's ongoing inability to generate free cash flow. We expect difficult industry challenges in 2013 to contribute to a low-single-digit organic growth rate and a small reduction in Tenet's margins. RELATED CRITERIA AND RESEARCH -- Business Risk/Financial Risk Matrix Expanded, Sept. 18, 2012 -- Liquidity Descriptors For Global Corporate Issuers, Sept. 28, 2011 -- Criteria Guidelines For Recovery Ratings, Aug. 10, 2009 -- 2008 Corporate Criteria: Analytical Methodology, April 15, 2008 -- 2008 Corporate Criteria: Rating Each Issue, April 15, 2008 -- 2008 Corporate Criteria: Ratios And Adjustments, April 15, 2008 RATINGS LIST Ratings Unchanged Tenet Healthcare Corp. Corporate Credit Rating B/Stable/-- New Rating Tenet Healthcare Corp. Senior Secured $850M notes due 2021 B+ Recovery Rating 2 Complete ratings information is available to subscribers of RatingsDirect on the Global Credit Portal at www.globalcreditportal.com. All ratings affected by this rating action can be found on Standard & Poor's public Web site at www.standardandpoors.com. Use the Ratings search box located in the left column.