Standard & Poor's Ratings Services said it raised its long-term rating to AA-minus from A-plus on Avera Health's debt outstanding (series 2008B, 2008C, and 2012A) issued by the South Dakota Health and Education Facilities Authority.
At the same time, it raiseditsr long-term rating to A-plus from A on Estherville, Iowa's series 2012 bonds, issued for Avera Holy Family.
The A-plus rating is based on a guarantee from Avera McKennan Hospital, part of Avera Health. The guarantee from McKennan, although unconditional, is not on parity with Avera Health's obligated group debt and is, therefore, rated one notch below our rating on Avera's bonds. Gross revenue from Avera Holy Family Hospital, a critical-access hospital located in Estherville, secures this series of bonds. The outlook on both ratings is stable.
"The AA-minus rating reflects our assessment of Avera's very strong financial profile, characterized by robust unrestricted reserves, a modest debt load, and consistently strong maximum annual debt service coverage," said Standard & Poor's credit analyst Kenneth Gacka.
At March 31, 2013, Avera had $399 million of long-term debt outstanding.