CHICAGO — The Illinois Finance Authority board this week gave final approval to deals for OSF Healthcare System and NorthShore University Health System that will raise new money for each and shift outstanding variable-rate debt to fixed rate to reduce market and liquidity risks.

The board also signed off on the redevelopment of a continuing-care community on the shores of Lake Michigan.

Peoria-based OSF is planning to issue about $160 million of debt as soon as next week to raise $25 million in new money towards the cost of its new corporate data center there. With fixed-rate spreads narrowing for health care credits, the system also will refund $142 million of variable-rate bonds and shift to a fixed rate.

OSF will contribute $12 million in cash towards the refunding. It would include $75 million from a 1985 transaction, $46 million of variable-rate bonds from a 2001 deal, and $20 million of auction-rate securities from 2007. “Refunding these bond issues with fixed-rate bonds will eliminate the risks associated with variable-rate bonds for this portion of OSF’s long-term debt,” IFA documents read.

Bank of America Merrill Lynch is senior manager and Cabrera Capital Markets LLC is a co-manager. Independent adviser Anne Donahoe is advising the system and Jones Day is bond counsel.

OSF operates five hospitals and one continuing-care and nursing home center in Illinois, including its largest facility, St. Francis Medical Center in Peoria. It also operates one hospital in Michigan.

The system carries ratings of A from Fitch Ratings and Standard & Poor’s and an A3 from Moody’s Investors Service. Ahead of the sale, Moody’s had downgraded the system by one notch to A3, affecting a total of $778 million of debt, including the upcoming issuance.

Moody’s attributed the action to the system’s weaker-than-expected operating performance in fiscal 2009 and through six months of fiscal 2010, primarily due to the effect of the challenging economy on volumes and charity care, along with investment in physician affiliation strategies and information systems.

“We believe some of these issues could continue to suppress operating performance below previously projected levels, resulting in weaker leverage measures including unfavorably high debt to cash flow and modest debt-service coverage,” Moody’s wrote.

The system had operating revenues of $1.6 billion in fiscal 2009 and 56,000 admissions. Its strengths include its leading market position in Peoria, unrestricted cash that covers 157 days cash on hand and its move to a more manageable debt structure with the upcoming financings. Its challenges include a decline in financial performance, ongoing economic challenges in several of its markets and competition from other facilities.

NorthShore University Health System plans to sell about $160 million this summer to refund about $144 million of variable-rate bonds that will be shifted to a fixed-rate structure, and to cover the estimated $21.5 million costs of terminating two fixed payor swaps.

The underwriting team includes JPMorgan, Barclays Capital, Loop Capital Markets LLC, and Wells Fargo Securities. Jones Day is bond counsel.

The NorthShore system includes four hospitals that serve the north suburbs of Chicago, including Evanston Hospital, Glenbrook Hospital, Highland Park Hospital, and Skokie Hospital. They collectively have 916 beds. The system is rated AA by Standard & Poor’s and Aa2 by Moody’s.

The board also gave final approval to the Admiral at the Lake continuing-care retirement community’s plans to borrow up to $225 million to refinance a bank loan and to raise new money to finance the reconstruction and equipping of the facility.

The unrated mix of floating- and fixed-rate bonds are not expected to carry any credit enhancement and will be secured by a mortgage and revenue pledge. Ziegler Capital Markets Group is the underwriter and Jones Day is bond counsel.

The facility was founded in 1858 as the Home for Aged and Indigent Females, the only facility of its kind devoted to housing homeless elderly women. It changed its name to the Old People’s Home of Chicago in 1887 and began serving men as well. In 1960, it moved to its current home — a former hotel known as the Admiral — on the city’s north side along Lake Shore Drive. The facility closed in 2007 and relocated residents in order to redevelop the facilities.

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