Moody’s Investors Service raised the debt rating of Hawaii Pacific Health to A3 from Baa1, citing four years of improved operating performance and a greatly simplified debt structure.
The upgrade comes in connection with the nonprofit hospital system’s plans to issue $159 million in bonds next week and in July using the Hawaii Department of Budget and Finance as conduit issuer.
“In the last two years, HPH has significantly simplified its debt structure, unwinding a number of swaps that had, at one point, had a total notional value greater than HPH’s total debt,” according to the Moody’s news release.
Analysts said the new fixed-rate bonds will further simplify and strengthen the system’s debt structure by reducing its exposure to putable debt from 66% of total debt to 18%, and also reducing the use of swaps to cover just 18% of its debt.
Bonds are secured by a pledge of gross receipts of the four-hospital system.
