Moody's Investors Service cut Torrance Memorial Medical Center's long-term rating to A2 from A1 ahead of a $234 million issue planned for next month.
The rating agency said it downgraded the credit because of a 330% increase in outstanding debt and risks associated with building a new patient tower on its main campus. The lower rating affects $56 million of bonds issued in 2001 and $34 million issued in 1992.
It kept its outlook at stable with the lower rating.
Moody's said the medical center still has strong operating performance, a solid balance sheet before debt, a stable source of patients and revenue, and a favorable market with less exposure to Medi-Cal.
The hospital plans to use the city of Torrance as a conduit issuer for $135 million of fixed-rate bonds, $64 million of variable-rate-demand bonds backed by a letter of credit from Citi, and $35 million of VRDBs that will be backed by an LOC from JPMorgan.
The proceeds will be used to refund the medical center's outstanding 1992 bonds and provide $200 million for the tower project.
