Fitch Ratings on Monday downgraded to AA-plus from AAA its rating on $71 million of Nemours Foundation outstanding health care revenue bonds. The rating agency said the outlook is stable.
The downgrade comes ahead of the upcoming $328 million offering on behalf of Nemours by the Orange County Health Facilities Authority. The bonds are expected to price in several series late this month and in October, Fitch said. Proceeds primarily will be used to finance the construction of a 96-bed children’s hospital in Orlando.
“The downgrade primarily reflects Nemours’ expected significant increase in financial leverage following the financing of the children’s hospital,” said a report by Fitch analyst Mary Catherine Messner. “Upon issuance of all Series 2009 bonds, pro-forma long-term debt will increase by 174%, to $409 million, with available funds as a percentage of such debt declining sharply to 136.5% from 472%, a level which is inconsistent with an AAA rating.”
Nemours is one of the nation’s largest health systems dedicated to children’s health care. It owns the Alfred I. duPont Hospital for Children in Wilmington, Del., as well as the Nemours Children’s Clinic, a single group practice with multiple locations in Wilmington and the Delaware Valley, as well as in Jacksonville, Orlando, and Pensacola in Florida.
