Hospitals Borrowing Less in 2021

By |November 3, 2021|

Year-to-date hospital bond issuance is down 31% from 2020. While “AA” rated health systems have borrowed 30% more than last year, “A” and “BBB” category issuance is significantly lower.

Hospitals and the SEC Municipal Advisor Rule

By |July 23, 2021|

Seven years after the SEC Municipal Advisor rule became effective, some not-for-profit hospitals are still unclear on what bond underwriters are permitted to discuss with them. This article provides an overview of the rule and some practical steps for hospitals to keep communications open with bond underwriters.

SEC To Require Bank Placement Disclosure

By |August 21, 2018|

The Securities and Exchange Commission announced yesterday that bank loans and direct placements will be added to the list of events that municipal borrowers must report under Rule 15c2-12 if they could materially impact existing bondholders. The changes will improve transparency in the municipal debt markets, and may significantly alter the playing field for some banks.

Healthcare Debt Issuance Behind Other Muni Sectors

By |July 18, 2018|

Municipal bond issuance is showing signs of returning to pre-tax reform levels, but hospitals may have hit the snooze button: healthcare volumes year to date are down 57%. Much of the lag is the result of last December’s rush to market, when hospitals sold bonds at twice the rate of other sectors before advance refundings went away. For hospitals willing to buck the trend, the limited supply of bonds is keeping credit spreads low and makes for a favorable borrowing environment.

Fitch: Multi-Notch Hospital Downgrades Not A Trend

By |July 11, 2018|

In March, we discussed how the new S&P rating criteria was bad news for hospital districts. It turns out the revised Fitch criteria is getting more publicity, most recently with two multi-notch downgrades in South Carolina. Earlier this week, Fitch issued a press release explaining the downgrades and clarifying their relevance to wider healthcare sector trends.

Hospital Bond Pricing and Option-Adjusted Spread

By |July 3, 2018|

As more hospital bonds are being sold with non-traditional call provisions, comparing pricing between issues has become more challenging. We recently took the bull by the horns and added option-adjusted spread (OAS) methodology to our independent bond pricing advisory and underwriter evaluation platform.

Hospitals Are Cutting Back on Ratings

By |June 22, 2018|

Hospitals are selling bonds with fewer ratings. According to HFA Partners research, 39% of hospital tax exempt fixed rate bond issues sold so far in 2018 came with a single rating, up from 21% in 2017. This trend is also affecting other municipal sectors, but there may be reasons why it is more pronounced in healthcare.

Hospitals and Selective Disclosure

By |June 4, 2018|

Hospitals and other municipal borrowers in the public bond markets are still trying to figure out how to avoid selective disclosure. Until they get more guidance from regulators on what is material information, many CFO’s are playing it safe and won’t talk to individual bondholders.

Can EMMA Give Obligors a Homepage?

By |May 2, 2018|

The MSRB’s EMMA website celebrated its 10th year anniversary with an enhanced design and navigation, but the data continues to be grouped by issuers, making it difficult to search for hospitals and other conduit borrowers.

LIBOR: Meet Your Replacement

By |April 18, 2018|

Earlier this month, the Federal Reserve Bank of New York started publishing daily rates for SOFR, the reference rate favored to replace LIBOR by 2021. For hospitals and thousands of other borrowers and swap counterparties, this is a positive development, but SOFR still has a long way to go before being adopted as the new reference rate.

MSRB Paper on Swaps Raises Concerns

By |April 10, 2018|

On Monday, the Municipal Securities Rulemaking Board published a paper on the regulatory framework for swaps. While the MSRB says the paper is intended to help educate market participants, industry groups were quick to question the board's true motive.

New S&P Criteria Bad News for Hospital Districts

By |March 19, 2018|

The methodology S&P published today for not for profit hospitals will not have a negative impact on the majority of standalone providers and health systems, but S&P expects more than half of all hospital districts will be downgraded, some up to three notches.

Bank Placements and Tax Reform Update

By |March 12, 2018|

It may be too early to tell, but three months after tax reform, most lenders who can raise rates on existing bank placements have not done so. Some don't want to lose business, and others are still unsure about how changes in their corporate tax rates will affect the profitability of placements relative to taxable loans.

Muni Markets Claim Another Bond Underwriter

By |February 9, 2018|

The Bond Buyer reported earlier this week that US Bank is downsizing its long term municipal bond underwriting and sales and trading. Bond underwriting, particularly in the hospital sector, has become increasingly dominated by a handful of Wall Street investment banks and tax reform could push more small firms to leave the business or sell to larger players.

2018 Hospital Bond Volume Predictions

By |January 4, 2018|

Last year, we predicted that hospital bond issuance would finish the year close to 2015 levels, but nowhere near the records seen in 2016. Had it not been for tax reform, we would have been close, so we decided to dust off the crystal ball again and divine hospital bond volumes in 2018.

HFMA Interview: Future of Tax Exempt Yields

By |December 20, 2017|

In the December 19 article "Tax-Exempt Bonds Preserved in Final Tax Bill" by Rich Daly, senior writer/editor for the Healthcare Financial Management Association, we were asked to discuss the impact of lower corporate income tax rates on yields hospitals will pay in the tax-exempt markets.

Tax Reform to Pressure Tax Exempt Yields

By |December 19, 2017|

The reduction in corporate income tax rates is expected to increase tax exempt yields for hospitals, and could reshape the market for bank direct placements and public bond offerings, particularly for lower rated borrowers.

Advance Refundings Not The Only Option

By |December 13, 2017|

Much to the chagrin of bond underwriters and other market participants, both House and Senate bills aim to take away access to advance refundings. Should the proposals become law, all is not lost for hospitals wanting to lock in today’s low rates to lower their cost of funds --but they must be willing to confront their fears and swim against the tide.

Hospitals Can Survive Without Tax-Exempt Debt

By |November 20, 2017|

As tax reform threatens to take tax exempt debt away from hospitals and municipal markets predict the imminent collapse of the healthcare sector, we compare taxable and tax exempt debt and conclude that for most hospitals, these concerns may be overblown.