Standard & Poor’s affirmed its BB rating on the Allegheny County, Pa., Hospital Development Authority’s $758 million of Series 2007A fixed-rate revenue bonds issued for West Penn Allegheny Health System, and removed the rating from negative watch. The longer-term outlook is negative.
“While West Penn has failed to meet financial projections outlined at the time of its 2007 bond issue, the debt restructuring did successfully decrease debt service requirements, which removed some of the immediate financial pressure from the system,” said analyst Cynthia Keller Macdonald.
“In addition, West Penn’s new management team has implemented sufficient operational, philosophical, and financial changes, which could lead to an improved financial position,” she wrote. “However, the situation remains challenging and a future downgrade is likely if management fails to post and sustain meaningful improvement in earnings during fiscal 2009 or cannot keep liquidity above current levels.”
