Fitch Ratings has downgraded West Penn Allegheny Health System's bond rating to C, from CCC, which the ratings agency says is based on reports that the health system and insurer Highmark Inc. "have tentatively agreed to a plan that would reduce the amount owed to bondholders and prevent a bankruptcy filing by WPAHS." The rating affects $726 million of series 2007A health system revenue bonds.
The Fitch statement said that a negotiated debt restructuring "appears to be inevitable to forestall insolvency" because of West Penn Allegheny's continued deteriorating financial situation and "the failure of WPAHS and Highmark to complete a proposed merger."
WPAHS spokeswoman Kelly Sorice this morning declined to comment on Fitch's action other than to say, "We remain in talks with Highmark and our bondholders."
Steve Twedt: firstname.lastname@example.org or 412-263-1963.