Health System Stays Stable

Moody’s Investors Service last week affirmed the A1 rating it assigns $506 million of debt sold for the University Health Systems of Eastern Carolina based on its dominant market position. The stable outlook also was affirmed.

The system formerly did business as the Pitt County Memorial Hospital and plays an important role as the academic medical center for East Carolina University’s Brody School of Medicine.

It reported stable financial performance through fiscal 2007, according to the Moody’s report. Analysts cited a healthy 3.9% operating margin that contributed to solid maximum annual debt service coverage of 3.88 times.

Most of the system’s debt is insured by Ambac Assurance Corp. About $349 million of the debt is variable-rate demand bonds, and about $123 million is seven-day auction-rate securities.

Moody’s analyst Lisa Goldstein noted the system’s exposure to variable-rate debt, which she said was “very high” at 93% of total debt. She added that while financial performance is at healthy levels, it has declined from a peak year in fiscal 2005.

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