Standard & Poor's Ratings Services said it raised the long-term rating to A from BBB-plus on Charlotte County Industrial Development Authority, Va.'s series 2004 bonds and Halifax Industrial Development Authority, Va.'s series 2007 bonds, issued for Halifax Regional Hospital.
The outlook is stable.
"The higher rating reflects our opinion of the recent acquisition of Halifax by Sentara Healthcare and Sentara's promise not to allow Halifax obligated group to default during the next 10 years," said Standard & Poor's credit analyst Jessica Goldman.
On July 1, the merger between the organizations was completed and there was a change of control for the organization. Initially, Halifax will not become part of Sentara's obligated group though there is potential for Halifax's debt to be defeased or become part of Sentara's credit structure in the near term.
While the affiliation agreement does not provide a full guarantee, there is a provision in the agreement that states that during the first 10 years, Sentara (rated AA) will not let the Halifax' obligated group default on its bonds or other financial obligations.
Although the support does not extend through the life of the bonds, the agency believes the agreement is an indication of Sentara's long-term commitment to Halifax. Evidence of Sentara's commitment was Sentara transferring $20 million to Halifax upon closing for the benefit of Halifax's balance sheet.
