An Alabama hospital was given S&P Global’s lowest bond rating of “D” on Wednesday, a day after it defaulted on bond interest payments.

Jackson Hospital & Clinic in Montgomery defaulted on about $60 million worth of Medical Clinic Board of the City of Montgomery series 2015 bonds, which comprises 86% of the hospital’s long-term debt, the S&P said in a statement explaining why it lowered the hospital’s rating to “D” from “CC.”

Efforts to immediately reach a hospital spokesperson were unsuccessful.

The bondholder requested full payment after the hospital failed to make interest payments. The Montgomery hospital’s liquidity, according to S&P, “is very thin and insufficient to meet the bondholders’ demand for full 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 S&P Global Ratings credit analyst Marc Arcas in a statement. “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.”

Bloomberg reported Jackson cited inflation and high labor costs for its financial situation.

Other Alabama hospitals are not immune to economic pressures.

A report last year by the Alabama Hospital Association found that the pandemic caused major financial problems for many of the state’s medical centers. About half of the state’s hospitals were losing money, the report found, and hospital margins dropped 79% from pre-pandemic levels.

Had the hospitals not received federal funding, the association claimed, those margins would have plunged more than 100%.

Alabama Hospital Association President Dr. Donald Williamson said the report “demonstrates that we are likely on a collision course with disaster, and we have only a short window to avoid losing access to services or seeing some hospitals close.

“While the access crisis will be worse in already underserved rural areas, as local hospitals close and patients pursue care in larger centers, many of the financially precarious urban facilities may not have the resources or capacity to absorb the volume,” he said. This report should be the canary in the coal mine for our state and national leaders to ensure the system avoids collapse.”