S&P Global Ratings lowered its long-term rating to D (default) from CC on The Medical Clinic Board of the City of Montgomery’s series 2015 bonds issued for Jackson Hospital and Clinic on Wednesday. 

According to the credit rating agency, the lowered rating was due to the hospital's recent missed interest payment.

"The 'D' rating reflects that Jackson missed its most recent interest payment to bondholders on the series 2015 bonds, which was due on Sept. 3, 2024," said Marc Arcas, S&P Global Ratings credit analyst. "The 'D' rating, by definition, indicates that the obligation is in default or in breach of an imputed promise, and this rating category is used when payments on an obligation are not made on the due date.”

This missed interest payment follows a notice of acceleration of the series 2015 bonds from the trustee, posted publicly on August 9. 

S&P Global Ratings said Jackson's liquidity is very thin and insufficient to meet the bondholders' demand for full payment. As of Dec. 31, 2021, the latest audited period, the amount outstanding for the series 2015 bonds was $70 million, which accounted for 86% of Jackson's long-term debt. The trustee has recently provided a more updated amount of $60 million outstanding for the series 2015 bonds.

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