Hospitals Beating Market Buoy $110 Million NYC Issue: Muni Deals
New York City Health and Hospitals Corp. is selling $110.3 million of bonds as hospital debt ranks as the municipal market’s second-best performer over the past six months.
Proceeds from the tax-exempt sale, which may occur as soon as tomorrow, will refund debt, including bonds that currently yield 4 percent and 5 percent, deal documents say. Bonds with a 5 percent coupon and maturing in October 2020 traded March 14 at an average yield of 1.79 percent, 36 basis points over a benchmark of the same maturity, according to data compiled by Bloomberg.
The hospitals corporation dominates among health providers in the New York metropolitan area, serving 28 percent of emergency department visits and 18 percent of inpatient discharges in the city, bond documents say. It operates 11 acute-care hospitals, six trauma centers and five long-term care facilities.
Moody’s Investors Service rates the debt Aa3, fourth- highest, reflecting the “essential city services” the agency provides. New York is also obligated to restore the corporation’s capital reserves if necessary, and revenue flows first to debt service before operations, the company said.
New York has committed $1.7 billion in city general- obligation debt for the corporation’s capital projects over the next 10 years, Standard & Poor’s said. The city gave the hospitals $2.1 billion over the past 14 years for modernization efforts. S&P rates the corporation’s debt A+, its fifth-highest level.
Hospital debt returned 2.45 percent over the past six months, the second-highest return among revenue debt in Barclays Capital indexes. Industrial-development debt ranked first, at 3.73 percent, while the index for the $3.7 trillion muni market increased 1.75 percent.
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