Standard & Poor’s Wednesday dropped the underlying rating on Antelope Valley Healthcare District revenue bonds to speculative grade.
The agency lowered $57.2 million of Series 1997A and B revenue bonds to BB from BBB-minus. The outlook is negative.
“Operating performance in fiscal 2007 was very weak, resulting in weak coverage of maximum annual debt service of less than 1.0x,” analyst Keith Dickinson wrote in a statement. “AVHD’s liquidity position has declined due to several years of operating losses and the use of cash to purchase a medical office building. Moreover, AVHD has been required to post collateral with its swap counterparty.”
In May, Moody’s Investors Service affirmed its Baa3 rating on the same debt and removed it from watch list for possible downgrade, though the outlook is negative. The 1997 bonds are wrapped by Financial Security Assurance, according to Thomson Reuters data.
