CHICAGO — Standard & Poor's on Sept. 12 revised its outlook on University of Iowa Hospitals and Clinics' AA rating to negative from stable citing potential strains from the system's big capital plans.
The system's bonds are sold by the Iowa Board of Regents. The system's fiscal 2014 operating performance was sound and its balance sheet saw growth, but projected capital spending and financial projections could stress the rating at its current level.
"The outlook change is due to a large capital plan that may result in a balance sheet no longer commensurate with an AA rating in the next two years," said Standard & Poor's analyst Liz Sweeney.
Additional capital plans in later years could also limit the ability to restore the credit to its current strength, the rating agency warned. Management believes that its forecast is conservative and actual performance will be improved, the report added. Capital spending may also be pared back to maintain unrestricted reserves.
"If UIHC is able to beat projections and no unexpected negative changes occur to the capital plan or financial performance, the outlook could be returned to stable in the next one to two years," the report read. "Actual performance at or worse than projected, sizable capital or debt plans beyond the two-year horizon, or negative changes in the organization's business position, could result in a lower rating."
