Moody’s Investors Service last week placed Marietta Area Health Care’s Ba1 rating on negative watch, affecting $38.5 million of outstanding debt. Marietta has an additional $33 million of letter-of-credit-backed debt not rated by Moody’s. Analysts expect to issue a full review of the credit within the next 30 days.
The action follows the delay of the release of Marietta’s 2009 audit as well as recent fiscal weakness. The delayed audit comes as MAHC tries to secure a waiver from Assured Guaranty Municipal for a covenant violation, according to a recent Moody’s report on the downgrade. MAHC has received waivers from JPMorgan and Fifth Third Bank, which both provide liquidity facilities on some of the system’s variable-rate debt.
Marietta has also suffered a “sizable operating loss” for the first six months of fiscal 2010 and “maintains weak balance sheet measures,” Moody’s said. The hospital has borrowed $6.5 million from a local bank to finance capital improvements and is currently trying to extend a letter of credit that backs an additional $13.1 million of debt, analysts said.
