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Fitch Rts Ascension Health's $350MM Bnds 'AA'; Outlk Stable.

Business Editors

NEW YORK--(BUSINESS WIRE)--July 22, 2002

Ascension Health's approximately $350 million series 2002 revenue bonds (listed below), are rated 'AA' by Fitch Ratings. The Rating Outlook is Stable. In addition, Ascension's outstanding parity issues of approximately $2.8 billion are affirmed at 'AA' or 'AA/F1+'. Certain outstanding portions are insured by MBIA Insurance Co. and Ambac Assurance Co., whose insurer strength is rated 'AAA' by Fitch. The outstanding issues are also listed below. Proceeds from the series 2002 bonds will be used to reimburse the system past capital expenses ($275 million), funds various capital projects ($35 million), and current refund two series of debt ($40 million). Ascension is also expected to payoff its outstanding commercial paper with cash and investments ($275 million), increasing total outstanding debt after issuance to $3.1 billion. The fixed rate series 2002A,B,C,F and G bonds are scheduled to price through negotiation on July 30 by underwriters Salomon Smith Barney, Inc., and Morgan Stanley & Co. Inc. and the auction rate series 2002D and 2002E bonds are expected to price August 14.

Fitch's affirmation of the 'AA/F1+' ratings is supported by Ascension's solid liquidity and debt service coverage, and improved operating profitability. Ascension's recently announced proposed merger with Carondelet Health System, a nine-hospital system that, like Ascension, is based in St. Louis, MO, is viewed neutrally by Fitch. The absorption of Carondelet, with total revenues approximately 10% of Ascension's, into Ascension's credit profile would not change any of Ascension's financial indicators materially. Fitch believes that the potential merger with Carondelet brings Ascension into some favorable markets as a strong player, such as in Tucson and Kansas City, while adding some smaller stand-alone hospitals that have operating challenges. However, these facilities would collectively get an immediate boost from the merger as Ascension's credit rating would afford a much lower cost of capital for these facilities. Ascension, which signed a non-binding letter of intent with Carondelet, is currently in the due diligence phase. A final closing of the merger may occur at the end of the year.

Operating income through nine months of fiscal 2002 ended March 31, 2002 continues to show improvement over prior years, largely due to improved pricing and steady volume growth. Operational improvement in many of Ascension's markets, as well as the acquisition of Baptist Hospital in Nashville, has been offset by lower than normal investment income. Pro forma debt service coverage from EBITDA through nine months of fiscal 2002 equaled a sound 3.5 times (x).

Concerns include continuing operating challenges in several markets, ongoing labor shortage concerns nationally, medical cost inflation, and a reduced 'safety net' with lower investment returns and less federal legislation givebacks expected. However, Fitch believes that Ascension's strong liquidity position, very capable management team and operating systems, and its geographic diversity, should mitigate these risks and slowly improve Ascension's operating profitability.

Ascension Health, the nation's largest not-for-profit healthcare system has annual revenue of $6.9 billion. The credit group consists of 57 health corporations in 12 states and the District of Columbia. Fitch considers Ascension's disclosure practices a model for the industry. In addition to providing quarterly financial information, Ascension maintains a detailed web site, complete with up-to-date financial data, and an employee dedicated specifically to investor relations.

Series 2002 Issues:

$45,000,000 Jacksonville Health Facilities Authority Revenue Bonds (Ascension Health Credit Group) Series 2002A

$57,000,000 Michigan State Hospital Finance Authority (Ascension Health Credit Group) Series 2002B

$42,000,000 Escambia County Health Facilities Authority (Ascension Health Credit Group) Series 2002C

$63,000,000 Wisconsin Health and Educational Facilities Authority Auction Rate Securities (Ascension Health Credit Group) Series 2002D-1,2

$ 37,000,000 Indiana Health Facility Financing Authority Auction Rate Notes (Ascension Health Credit Group), Series 2002E

$ 106,000,000 Indiana Health Facility Financing Authority Revenue Bonds (Ascension Health Credit Group), Series 2002F,G.

Outstanding Issues:

$100,000,000 Indiana Health Facility Financing Authority Revenue Bonds (Ascension Health Credit Group) Series 2001A-1

$100,000,000 Indiana Health Facility Financing Authority Revenue Bonds (Ascension Health Credit Group) Series 2001A-2

$100,000,000 Indiana Health Facility Financing Authority Revenue Bonds (Ascension Health Credit Group) Series 2001A-3

$100,800,000 Indiana Health Facility Financing Authority Revenue Bonds (Ascension Health Credit Group) Series 2001A-4

$181,500,000 The Health and Educational Facilities Board of The Metropolitan Government of Nashville and Davidson County, Tennessee Revenue Bonds (Ascension Health Credit Group), Series 2001B

$29,300,000 Illinois Development Finance Authority variable-rate revenue bonds (St. Vincent de Paul Center Project), series 2000A

$37,215,000 Puerto Rico Industrial, Tourist, Educational, Medical, and Environmental Control Facilities Financing Authority Revenue Bonds (Hospital De La Concepcion Project), Series 2000A

$100,000,000 Alabama Special Care Facilities Financing Authority of Birmingham Variable Rate Revenue Bonds (Ascension Health Credit Group), Series 1999B

$127,000,000 Alabama Special Care Facilities Financing Authority of Mobile Variable Rate Revenue Bonds (Ascension Health Credit Group), Series 1999B

$42,800,000 State of Connecticut Health and Educational Facilities Authority Variable Rate Revenue Bonds (Ascension Health Credit Group), Series 1999B

$95,300,000 Escambia County Health Facilities Authority Revenue Bonds (Ascension Health Credit Group), Series 1999A-1 (insured: Ambac)

$61,200,000 Escambia County Health Facilities Authority Revenue Bonds (Ascension Health Credit Group), Series 1999A-2

$568,485,000 Michigan State Hospital Finance Authority Revenue Bonds (Ascension Health Credit Group), Series 1999A (insured: MBIA)

$340,000,000 Michigan State Hospital Finance Authority Variable Rate Revenue Bonds (Ascension Health Credit Group), Series 1999B

$16,865,000 City of Pottsville Hospital Authority Revenue Bonds (Ascension Health Credit Group), Series 1999A (insured: Ambac)

$172,025,000 The Health and Educational Facilities Board of The Metropolitan Government of Nashville and Davidson County, Tennessee Revenue Bonds (Ascension Health Credit Group), Series 1999A (insured: Ambac)

$267,865,000 Travis County Health Facilities Development Corporation Revenue Bonds (Ascension Health Credit Group), Series 1999A (insured: Ambac and MBIA)

$20,470,000 Waco Health Facilities Development Corporation Revenue Bonds (Ascension Health Credit Group), Series 1999A

$28,200,000 Wisconsin Health and Educational Facilities Authority Revenue Bonds (Ascension Health Credit Group), Series 1999A (insured: MBIA)

$23,545,000 Maryland Health and Higher Educational Facilities Authority Hospital Revenue Bonds (Charity Obligated Group), Series 1999A

$13,625,000 Schuylkill County Industrial Development Authority, Pennsylvania Revenue Bonds (Charity Obligated Group), Series 1999A

$505,300,000 Indiana Health Facility Financing Authority (Ascension Health Credit Group) Series 1999B Variable Rate Revenue Bonds

$121,135,000 Indiana Health Facility Financing Authority (Charity Obligated Group) Series 1999D Revenue Bonds
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Publication:Business Wire
Date:Jul 22, 2002
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