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Fitch Rates Trinity Health Credit Group, MI, Bonds ``AA-''.

Business Editors

NEW YORK--(BUSINESS WIRE)--Oct. 16, 2000

Fitch assigns a `AA-` to the $146 million Michigan State Hospital Finance Authority, refunding revenue bonds (Trinity Health Credit Group), series 2000A and to $47 million Iowa Finance Authority, refunding revenue bonds (Trinity Health Credit Group) series 2000B bonds.

Bond proceeds will be used to refinance all or portions of several series of bonds, which are advanced refundable under current tax law. The par amounts for the series 2000A and 2000B bonds are subject to change based on market conditions, however, Trinity Health's total pro forma debt will be no greater than approximately $1.6 billion.

Trinity Health also plans to issue up to approximately $476 million of series 2000C-F variable rate debt (a net increase of only $150 million) in the next month to refinance certain other existing debt and to fund $150 million of new money needs. Fitch will assign short-term ratings at that time.

With this rating action, all of Trinity Health-Michigan (formerly known as Mercy Health Services) and Trinity Health (formerly known as Holy Cross Health System) bonds will also carry the `AA-` rating (see listing below). The bonds are expected to sell the week of Oct. 23 through negotiation by Morgan Stanley Dean Witter and Goldman Sachs & Co.

The 'AA-' rating is supported by Trinity Health's strong debt service coverage, geographic diversity, consistent profitability, strong management team, and low debt burden. Pro forma debt service coverage for audited fiscal 1999 and 2000 was strong, with coverage greater than 3.4 times (x).

Trinity Health benefits from geographic diversity with facilities in 7 states, including Michigan, Iowa, Indiana, Maryland, Idaho, Ohio, and California. Historical pro forma performance at Trinity Health has been solid with operating margins over 1.5% and excess margins over 5.6% between fiscal 1998 and 1999. Fiscal 2000 operating and excess margins were 0.5% and 3.0%, respectively (excluding several one-time restructuring charges, including the closure of Mercy Hospital Detroit and merger costs). Trinity Health's debt load is light with maximum annual debt service as a percentage of revenues of 3.2%.

Credit concerns include Trinity Health's light liquidity position (in relation to its rating category), increasing downward pressures on revenues, competitive markets in southeastern Michigan and other areas, and its weaker fiscal 2000 performance. At June 30, 2000, Trinity Health maintained days cash on hand of 158, cushion ratio of 12.3x, and a pro forma cash to debt position of 104%.

Managed care payors and the Balanced Budget Act of 1997 (BBA) have continued to place pressures on Trinity Health revenue streams, as can be seen by the slowing of revenue growth. Fitch's outlook for Trinity Health is stable, as it will take some time for the system to completely gel and begin to benefit from its cost saving initiatives and market leverage.

Trinity Health, the sole corporate member of Trinity Health- Michigan is the fifth largest non-profit health care system in the U.S based on revenues and is comprised of 47 owned or managed acute care hospitals and other related health care entities located in 7 states.

Fitch is an international rating agency that provides global capital market investors with the highest quality ratings and research. Dual headquartered in New York and London with a major office in Chicago, Fitch rates entities in 75 countries and has some 1,100 employees in more than 40 local offices worldwide. The agency, which is a combination of Fitch IBCA and Duff & Phelps Credit Rating Co., provides ratings for Financial Institutions, Insurance, Corporates, Structured Finance, Sovereigns and Public Finance Markets worldwide.

--$146,000,000 Michigan State Hospital Finance Authority,

refunding revenue bonds (Trinity Health Credit Group), series

2000A.

--$47,000,000 Iowa Finance Authority, refunding revenue bonds

(Trinity Health Credit Group), series 2000B.

--$70,370,000 Michigan State Hospital Finance Authority, revenue

and refunding bonds (Mercy Health Services Obligated Group),

series 1999X (MBIA insured).

--$43,545,000 Michigan State Hospital Finance Authority, revenue

refunding bonds (Mercy Health Services Obligated Group),

series 1997S (MBIA insured)/a.

--$56,075,000 Michigan State Hospital Finance Authority, revenue

refunding bonds (Mercy Health Services Obligated Group),

series 1997T (MBIA insured)/a.

--$38,610,000 Iowa Finance Authority, revenue refunding bonds

(Mercy Health Services Obligated Group), series 1997V (FSA

insured)/a.

--$29,390,000 Sioux City, Iowa, revenue refunding bonds (Sisters

of Mercy Health Services Corporation Obligated Group), series

1993O (MBIA insured).

--$125,165,000 Michigan State Hospital Finance Authority, revenue

refunding bonds (Sisters of Mercy Health Corporation Obligated

Group), series 1993P (MBIA insured)/a.

--$9,875,000 Michigan State Housing Development Authority, limited

obligation revenue bonds (Mercy Bellbrook Project) series 1993

(MBIA insured)/a.

--$71,765,000 Michigan State Hospital Finance Authority, revenue

refunding bonds (Sisters of Mercy Health Corporation Obligated

Group), series 1992M.

--$1,220,000 Michigan State Hospital Finance Authority, revenue

bonds (Sisters of Mercy Health Corporation), series 1991J.

--$19,930,000 City of Fresno, California, hospital refunding

revenue bonds, series 1998 (Holy Cross Health System

Corporation) (MBIA insured).

--$51,850,000 Idaho Health Facilities Authority, hospital revenue

bonds, series 1998 (Holy Cross Health System Corporation)

(MBIA insured).

--$92,305,000 Indiana Health Facilities Financing Authority,

hospital revenue bonds, series 1998 (Holy Cross Health System

Corporation) (MBIA insured).

--$50,090,000 County of Franklin, Ohio, hospital revenue bonds,

series 1998 (Holy Cross Health System Corporation) (MBIA

insured).

--$17,545,000 County of Franklin, Ohio, hospital revenue refunding

bonds, series 1990A (Mount Carmel Health).

--$17,805,000 City of Fresno, California, hospital refunding

revenue bonds, series 1993A (Holy Cross Health System

Corporation).

--$40,000,000 City of Fresno, California, hospital revenue bonds,

series 1993B (Holy Cross Health System Corporation).

--$34,000,000 Maryland Industrial Development Financing Authority,

revenue bonds, series 1993 (Holy Cross Health System

Corporation).

--$30,430,000 County of Franklin, Ohio, hospital revenue refunding

bonds, series 1993 (Holy Cross Health System Corporation).

--$40,000,000 Idaho Health Facilities Authority, variable rate

revenue bonds, series 1995, (Holy Cross Health System

Corporation).

--$64,600,000 County of Franklin, Ohio, variable rate hospital

revenue bonds, series 1995, (Holy Cross Health System

Corporation).

--$58,480,000 County of Franklin, Ohio, hospital revenue bonds,

series 1996, (Holy Cross Health System Corporation).

--$25,275,000 Maryland Industrial Development Financing Authority,

hospital revenue refunding bonds, series 1996, (Holy Cross

Health System Corporation).

--$72,420,000 Michigan State Hospital Finance Authority, hospital

revenue and refunding bonds (Mercy Mount Clemens Corporation

Obligated Group), series 1999A (MBIA insured)/a.

--$17,905,000 Michigan State Hospital Finance Authority, revenue

bonds (Mercy Health Services Obligated Group), series 1997U

(MBIA insured)/a.

--$45,155,000 Michigan State Hospital Finance Authority, revenue

bonds (Mercy Health Services Obligated Group), series 1997W

(FSA insured)/a.

--$43,480,000 Michigan State Hospital Finance Authority, revenue

bonds (Mercy Health Services Obligated Group), series 1996Q

(Ambac insured)/a.

--$25,970,000 Michigan State Hospital Finance Authority, revenue

bonds (Mercy Health Services Obligated Group), series 1996R

(Ambac insured)/a.

--$17,705,000 Iowa Finance Authority, revenue bonds (Sisters of

Mercy Health Corporation Obligated Group), series 1992N.

Note /a: Certain maturities of the above issues are unenhanced.
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