The North Carolina Baptist Hospital is expected to price $330 million of revenue refunding bonds on Wednesday to redeem all its outstanding bonds.

The Series 2010 bonds will be issued through the North Carolina Medical Care Commission. The fixed-rate bonds will redeem the hospital’s entire outstanding debt portfolio consisting of variable-rate revenue bonds from 1992, 1996, 2000, and 2009.

The refunding bonds are rated Aa3 by Moody’s Investors Service and AA-minus by Standard & Poor’s.

The hospital, located in Winston-Salem, has seen its cash flow decline as competition in the area has grown. It trails two other hospitals in market share for primary care, but is a market leader in services for cancer treatment, trauma, and other non-primary-care services.

In fiscal 2009, operating margin for Baptist and its affiliates dropped to 0.2% from 1% in fiscal 2008. Moody’s analysts said in a report that they “expect improvement” in fiscal 2011 for the health care provider’s operating and capital budgets.

Standard & Poor’s said Baptist may issue $150 million to $200 million of debt over the next three years for capital plans. An issuance of that amount “could strain debt-service coverage measurably unless cash flow increases commensurately,” analysts said.

Baptist is expected to fund the costs of terminating all of its existing swaps with internal funds. The cost of termination was estimated at a $14 million as of Jan. 31, Moody’s said.

Morgan Stanley, BB&T Capital Markets, and Goldman, Sachs & Co. will underwrite next week’s sale. McGuireWoods LLP is bond counsel. Hawkins Delafield & Wood LLP and Bode, Call & Stroupe LLP are representing the underwriters. Kaufman Hall & Associates Inc. is financial adviser.

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