CHICAGO - Silver Cross Hospital and Medical Center leads a pack of borrowers slated to come to market through the Illinois Finance Authority this spring.
Silver Cross as soon as Tuesday will refund $260 million remaining from a 2009 issue, adding some new debt to the hospital's balance sheet to cover negative arbitrage on the advance refunding. Goldman Sachs is the senior manager and Loop Capital Markets LLC is also on the underwriting team.
Fitch Ratings affirmed Silver Cross Hospital and Medical Center's BBB-plus rating and stable outlook while Moody's Investors Service assigned an initial Baa1 rating and stable outlook to $283 million of hospital debt.
The hospital's total debt level will rise to $415 million from about $393 million after the issue. While the majority of its debt is in a fixed-rate structure, Silver Cross has a direct placement with PNC Bank for $13.5 million and three direct placements with First Midwest Bank for $8.9 million, $17.9 million and $8.9 million.
The hospital is located in the southwest Chicago suburb of New Lenox. The bonds are secured by a revenue and mortgage pledge of the obligated group.
Moody's said its rating is supported by the hospital's "leading market position in a favorable service area, high multi-year volume and market share growth, successful partnership strategies that mitigate risks of operating as an independent hospital in a consolidating market, track record of strong operating cash flow margins, and limited capital needs following the opening of a new hospital in 2012."
The hospital's central challenge is its very high leverage. It generated $348 million of revenues in fiscal 2014.
Fitch said the hospital benefits strong operating cash flow that exceeded expectations for fiscal 2014 and through the three months of fiscal 2015. Its volume grew by 22% between 2012 and 2014 following the opening of its new facility.
"Fitch believes Silver Cross' successful partnerships with other providers in certain service lines has resulted in strong volume at the new facility, since it brings clinical expertise to its campus while limiting outmigration to Chicago as well as capturing market share from its competitors," analysts wrote.
The hospital partners with the Rehabilitation Institute of Chicago, Northwestern Memorial Health Care and University of Chicago and Lurie Children's Hospital for various specialty services. It also established an affiliation this year with Advocate Health Care.
Fitch also called Silver Cross' debt burden high with maximum annual debt service at approximately 7.8% of fiscal 2014 revenue. That compares to a 3.6 % level for credits in the BBB category at Fitch.
The IFA board last week signed off on the sale and a handful of others.
Midwestern University Foundation is issuing up to $20 million to help finance private education loans to its Illinois students. The sale will tap a portion of the authority's private-activity volume cap. Midwestern University is located in Downers Grove with a second campus in Arizona, and offers degrees in various fields of medicine, pharmacy, dentistry, and the health sciences. The school carries ratings in the single A category. RBC Capital Markets will serve as underwriter.
Noble Network of Charter Schools is selling up to $22.5 million to refund outstanding debt in a public offering with B.C. Ziegler & Co. serving as underwriter. The charter school network carries a BBB rating from Standard & Poor's.
The organization IFF, which has grant funding from the U.S. Department of Education for its Charter School Credit Enhancement Program, will provide assistance in the form of a cash funded debt reserve of up to $2.1 million to be accessed by the trustee in the event of a payment default.
CHF-Cook LLC is issuing up to $45 million to finance a 110-unit, 440-bed apartment-style student housing facility on Northeastern Illinois University's main campus in Chicago. The project will be owned by CHF-Cook, L.L.C, an affiliate of Collegiate Housing Foundation, and will be developed and constructed by an affiliate of American Campus Communities, Inc.
RBC Capital Markets is the underwriter and a low investment grade rating is expected. The bonds will be secured by revenues collected by NEIU on behalf of the borrower.
The University of Chicago Medical Center received approval for a private placement of $25 million with Loop Capital Markets to refund 2009 debt. The bonds will be secured by a security interest in the unrestricted receivables of the obligated group.
