Fitch Ratings knocked West Penn Allegheny Health System's credit rating to C and said analysts believe “negotiated debt restructuring appears to be inevitable to forestall insolvency.”
The C rating is the lowest Fitch rating that does not indicate a default. West Penn Allegheny, the financially troubled Pittsburgh health system in talks to be acquired by the insurer Highmark, was previously rated CCC by Fitch.
The acquisition has been closely watched nationally as one of several deals by insurers to expand their reach in healthcare delivery. West Penn Allegheny's financial distress could also garner significant attention should talks with bondholders fail and should the health system default on payment to bondholders, said David Cyganowski, managing director with healthcare financial advisers Kaufman Hall.