LOS ANGELES — The California Health Facilities Financing Authority, a conduit issuer, last week approved an $850 million bond issuance for St. Joseph Health System, according to a spokesman.

The bond proceeds will be used to refinance prior debt held by Hoag Memorial Hospital Presbyterian and to finance new capital projects at five SJHS acute care hospital facilities, according to a report released by CHFFA.

Irvine, Calif. based SJHS, a nonprofit public benefit corporation, entered into an affiliation agreement in February with Hoag Memorial Hospital Presbyterian. Upon the issuance of the 2013 bonds, Hoag will become a member of the SJHS Obligated Group.

Morgan Stanley & Co. LLC will act as the underwriter on the negotiated public offering with fixed rate bonds expected to be issued in minimum denominations of $5,000.

The bonds have been rated  A1 by Standard & Poor’s and AA-minus by Fitch Ratings and Moody’s Investors Service.

Hoag is a nonprofit, regional Health Care Delivery network in Newport Beach, Calif., that treats nearly 25,000 inpatients and more than 370,000 outpatients annually and consists of two acute care hospitals, seven health centers, and five urgent care centers.

The refunding will be for $563 million, of which $552 million is currently outstanding, loaned to Hoag by the City of Newport Beach, Calif. to finance and refinance the construction, expansion, remodeling, renovation, furnishing, equipping and acqusition of heatlh facilities, according to the report.

The bond proceeds will be used to refinance prior debt held by Hoag through the refunding of outstanding bonds issued by the City of Newport Beach and  fund new capital projects at five SJHS acute care hospital facilities.

Hoag has $495 million in outstanding debt as of fiscal 2011, according to the report.

The operating debt service coverage ratio is 3.94 times for fiscal year 2012.

The planned issuance will increase the amount of outstanding debt held by St. Joseph to $2.5 billion.

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