Standard & Poor’s downgraded Sherman Health’s credit two notches to BBB from A-minus due to greater-than-expected operating losses in fiscal 2008 and fiscal 2009.

The losses “resulted in weak maximum annual debt service coverage through interim 2009 of 1 times,” analysts wrote. The hospital’s administration had expected to make a modest profit. Management also now is reporting softness in volume levels and declines in unrestricted liquidity related mostly to challenges posed by the equity markets.

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