Fitch cuts Ramsay Healthcare rating over debt delays

The news: Ratings agency Fitch has cut its credit rating on Ramsay Healthcare due to the company’s delay in cutting debt amid high costs.

The numbers: Fitch downgraded Ramsay’s rating to 'BBB-', from 'BBB' earlier but kept the outlook at ‘Stable’. In a separate statement to the ASX, Australia's largest private hospital operator said the decision would result in its funding costs increasing by 10 basis points on a $1.5 billion loan. It reaffirmed net interest expense for fiscal 2024 would remain in the range of $570 million to $600 million.

The context: Fitch said the downgrade reflected the delays in Ramsay deleveraging as it continues to address labour market and inflationary challenges, alongside efficiency issues across its portfolio. Ramsay shares are down 20% so far this year amid its struggle for a recovery in earnings from its hospitals at a time of high labour and interest expenses. It comes as the healthcare giant shortlists bidders for the sale of a hospital unit jointly owned with Malaysian conglomerate Sime Darby.