CHOC Gets A Rating

The Children’s Hospital of Orange County received A ratings from Fitch Ratings and Standard & Poor’s on $105 million of fixed-rate bonds expected to sell on Oct. 24.

Morgan Stanley is the underwriter on the CHOC bonds, which will be issued through the California Health Facilities Financing Authority.

The rating agencies also both affirmed A ratings on $266 million of outstanding debt from two separate issues in 2007 and 2009.

Fitch analysts based its rating not only on the hospital’s 238-bed pediatric hospital located in Orange County, but also on the consolidated entity, Children’s Healthcare of California and Affiliates, which includes CHOC Children’s at Mission Hospital, CHOC Children’s Foundation and other related entities.

The bond proceeds will be used to complete the hospital’s master facility plan, which includes construction of a new seven-story tower and remodeling of the existing tower. The new structure will add 142 beds, a new emergency department, surgical and recovery suites, imaging and diagnostic services.

“The A rating reflects our view of CHOC’s dominant market position as the only stand-alone pediatric provider in the affluent Orange County market, good historical utilization trends, and improved financial profile,” Standard & Poor’s credit analyst Suzie Desai in a statement.

Analysts also lauded the hospitals’ nearly 70% market share in 2009, up from 56% in 2003. Market share is expected to continue to grow because of the hospitals’ regional partnerships, including a newly minted transfer agreement with St. Jude Medical Center — part of the St. Joseph Health System — to provide their pediatric services.

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Healthcare industry California
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