Intermountain Healthcare's $158M Deal Meets Strong Demand

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DALLAS -Utah's Intermountain Healthcare Services found a receptive muni market when it priced $158 million of tax-exempt bonds July 22, officials said.

With ratings of Aa1 from Moody's Investors Service and AA-plus from Standard & Poor's, the bonds drew yields of 3.65% on 5% coupons maturing in 2045, according Thomson Reuters.

Utah County was the conduit issuer.

"It is our understanding that the spread to the MMD that we locked-in the final term bond (36 basis points) is the lowest of any not-for-profit healthcare system since the financial crisis, and perhaps of any uninsured healthcare transaction even prior to that," said IHC spokesman Daron Cowley via email.

"Although Intermountain Healthcare does not try to be a market timer and schedules our bond issuances according to strategic needs, we were pleased to watch as long-term interest rates fell from their levels earlier in the year," he said. "We are fortunate to have received consistent support from a wide variety of investors in both the primary and secondary markets."

Wells Fargo Bank and J.P. Morgan were co-senior managing underwriters on the transaction, with Wells Fargo as book-runner. George K. Baum & Co. was financial advisor.

An additional $80 million of variable rate bonds will be issued on July 29 in the windows mode, Cowley said. After this deal, Intermountain will have equal amounts of fixed and variable-rate debt, according to Moody's. Total outstanding debt is about $1.5 billion, analysts said.

Proceeds of the three new series will be used to finance several capital projects including renovation of the Utah Valley Regional Medical Center, Intermountain's primary acute care facility in the southern portion of the Wasatch Front. The bonds will also finance expansion of the Riverton Hospital and Park City Medical Center and construction of several new outpatient clinics throughout the state.

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Healthcare industry Utah
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