The rating on $481.6 million of general obligation bonds issued by Palomar Pomerado Health was dropped one notch to A-plus on Dec. 23.

Fitch Ratings downgraded the bonds that are secured by an unlimited, voter-approved tax on all taxable property within the district boundaries. The district is required to pay the bond debt in the event that the property tax revenues are insufficient. Analysts gave the bonds a stable outlook.

The downgrade reflects Fitch’s increased focus on the financial risk related to hospital operations as a result in a change of methodology for rating tax-supported debt that occurred on July 15, the report states.

Moody’s Investors Service has rated the bonds A1, while Standard & Poor’s gave them an A-plus.

Almost 69% of district voters authorized $496 million of GOs in 2004 to finance a substantial expansion and modernization of the district’s facilities. That authorization has been fully depleted, with GO bonds funding almost half of the $1.06 billion capital program.

Fitch maintains a BB-plus and stable outlook on $582.5 million of district certificates of participation and revenue bonds.

The rating and outlook reflect the hospital’s ongoing construction project, low liquidity, and adequate profitability, along with the expectation that management will successfully complete its master facility plan without further deterioration in the district’s liquidity and leverage positions.

The hospital system comprises 45% of the hospital beds in northern San Diego County.

Its facilities include two acute-care hospitals, two skilled nursing facilities, a surgery center, and an ambulatory care center.

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