The New York State Dormitory Authority plans to sell $491 million of Series 2011A revenue bonds for the North Shore-Long Island Jewish Obligated Group through negotiated bid on Thursday, following a one-day retail order period.
According to DASNY’s managing director of public finance, Portia Lee, the deal will integrate all the system’s hospital members into a single legal, credit, debt and operational structure. The transaction will include both new-money and refunding bonds, Lee said.
The health care system plans to replace 115 beds at Zucker Hillside Hospital in Glen Oaks, N.Y., build an education and conference center at Staten Island University Hospital in Staten Island, and construct a parking facility at Huntington Hospital on Long Island.
The refunding of nine series of bonds are to bring Staten Island University, Huntington, Franklin Hospital in Valley Stream, Southside in Bayshore, and Lenox Hill Hospital in New York into the group structure. No swaps or insurance is involved.
North Shore-Long Island Jewish Obligated Group has about $1 billion of outstanding Dormitory Authority debt, according to Lee.
Standard & Poor’s and Fitch Ratings each rate the bonds A-minus, while Moody’s Investors Service rates it A3. All three provide a stable outlook.
S&P cited the system’s growth and its dominance in Long Island’s Nassau and Suffolk counties. Operating surpluses have improved for three straight years. Analyst Stephen Infranco also praised management for its emphasis on long-term growth.
Infranco also cited “partially offsetting” credit factors, including an unfunded pension liability of $343 million as of fiscal year-end 2010; a six-year, $3.1 billion capital spending phase; continued integration of Lenox Hill Hospital, which it absorbed in May 2010; and a challenging economic environment, including projected deficits at the state level that could include Medicare reimbursement cuts.
Citi is lead manager, Orrick, Herrington & Sutcliffe LLP is bond counsel, and Hawkins Delafield & Wood LLP is counsel for the health care system. Ropes & Gray LLP is disclosure counsel and Kelley Drye & Warren is disclosure counsel. Mintz, Levin, Cohn, Ferris, Glovsky and Popeo PC is counsel to the underwriters.
