Texas Hospital Shops Sale of Top-Earning Debt: Muni Deals
El Paso County Hospital District is selling $255.7 million in debt, its largest offering, as bonds from hospital issuers outpace the broader $3.7 trillion muni market.
The issue set to price tomorrow includes $139.9 million in tax and revenue certificates of obligation for renovating and expanding the University Medical Center of El Paso, according to deal documents. Another $115.8 million in general-obligation bonds will be sold to refinance higher-cost debt.
The $150 million project includes three new outpatient clinics to boost access to health services, said Michael Nunez, the district’s chief financial officer. The 395-bed acute-care facility serves Texas’s sixth-largest city and is a teaching hospital for Texas Tech University’s medical school.
“We’re trying to alleviate the costs from the more expensive emergency-room visits,” Nunez said by telephone.
The district covers 1,058 square miles (2,740 square kilometers) with a population of more than 800,000, said Fitch Ratings, which grades the debt AA, its third-highest score and one step higher than the AA- from Standard & Poor’s.
The sale is the largest for the district since it was formed in 1958, according to data compiled by Bloomberg. The El Paso hospital’s general-obligation debt will total $391 million after the offering, according to the documents.
Officials aim to achieve a borrowing cost of less than 4.5 percent, Nunez said. Almost all the obligations to be refinanced carry a 5 percent interest rate, the documents show.
Hospital debt returned about 1.96 percent this year through April 25, compared with 1.42 percent for the broader U.S. muni market, Standard & Poor’s indexes show.
To contact the reporter on this story: Romy Varghese in Philadelphia at firstname.lastname@example.org
To contact the editor responsible for this story: Stephen Merelman at email@example.com