CHICAGO — More than $1 billion of borrowing by health care facilities in Illinois is expected in the coming months in deals approved by the Illinois Finance Authority board amid improved market access for the sector.

“The health care credit markets continue to improve” as yields have shrunk, and the agency expects “activity to increase with many borrowers converting floating rate debt to fixed rates,” according to an IFA report. “Prior to the end of the calendar year, we anticipate eight to 10 additional financings to close.”

The IFA board at a meeting last week gave preliminary approval to Oak Brook, Ill.-based Advocate Health Care Network’s new-money and refunding sale of up to $280 million.

The Chicago region’s largest hospital system would use $150 million to restructure existing debt and another $112 million to fund new projects, including ones at BroMenn Healthcare, which serves the Bloomington-Normal area and is being acquired by Advocate.

Advocate carries ratings of AA from Fitch Ratings and Standard & Poor’s and a Aa3 from Moody’s Investors Service.

The system is still deciding on the deal’s structure, including whether to issue fixed-rate or floating-rate debt.

Advocate expects to issue later this year using Citi as its senior manager and Loop Capital Markets LLC and Cabrera Capital Markets LLC as co-managers. Chapman and Cutler LLP is bond counsel.

Advocate operates nine acute-care hospitals and its acquisition of BroMenn allows the system to expand into the Bloomington-Normal area.

As part of the merger agreement, Advocate will finance the construction of a new bed tower and other projects at the main BroMenn campus and its Eureka Community Hospital.

“We believe that this partnership could support and strengthen our community base and mission, assuring that we carry on our tradition of providing quality care close to home,” BroMenn president Roger Hunt said in a statement on the union.

Memorial Health System in Springfield received preliminary approval to sell up to $170 million of new-money and refunding fixed-rate bonds. About $121 million of the proceeds would go to fund new projects, including a replacement hospital in Lincoln. and expansion and renovation projects at its Springfield facility with the remainder refunding debt sold in 1997.

Construction began on a replacement hospital in Lincoln in July. The 116,000-square-foot facility carries a price tag of $50 million and is expected to be completed by the end of 2010. Piper Jaffray & Co. is the senior manager. Jones Day is bond counsel. 

The system later this month will meet with rating agencies and expects ratings in mid- to late November ahead of the sale.

Chicago-based Resurrection Health Care also received preliminary approval for its sale this fall of up to $120 million of fixed-rate bonds to refund existing floating-rate debt ahead of the expiration of letters of credit that currently support the debt.

Banc of America Merrill Lynch is the senior manager and Jones Day is bond counsel. The system holds a 31% market share and has ratings of A-minus from Fitch, BBB-plus from Standard & Poor’s, and Baa1 from Moody’s.

Standard & Poor’s in May revised its rating to negative from stable, citing “sizeable” losses, which have eroded the Catholic system’s liquidity and debt-service coverage ratios. The system has about $600 million of debt.

Analysts said they remain concerned over the system’s floating-rate exposure, which the upcoming refunding should help ease a bit.

“While Resurrection continues to maintain a leading market position in many of its markets, and while specific cost savings initiatives should support the credit, some meaningful and sustained improvement in financial operations is required to return the outlook to stable,” said analyst Suzie Desai.

Winfield-based Central DuPage Health received final approval for its sale this fall of up to $280 million of fixed-rate debt. Proceeds would refund debt sold in 2000 and 2004 and finance about $150 million of projects, including construction of a new 280,000-square-foot, five-story bed pavilion with a diagnostic imaging facility, private medical surgical rooms, and a parking garage.

The system has ratings of AA from both Fitch and Standard & Poor’s. Morgan Stanley is underwriter and Jones Day is bond counsel.

The modern tower is needed “in order to continue to function as a top medical institution,” according to IFA documents. The hospital, located about 30 miles west of Chicago, was established in 1963 by a group of community citizens who purchased facilities that made up the Winfield Tuberculosis Sanitarium from the Jewish Federation of Metropolitan Chicago.

Timothy Place won final approval for its sale later this year of up to $195 million of fixed-rate bonds to finance construction of a continuing care community, with Ziegler Capital Markets as underwriter and Jones Day as bond counsel.

Timothy Place is a facility that will house 173 one-, two-, and three-bedroom independent-living units, 10 catered living apartments, 46 assisted-living units, 20 memory support assisted-living units, 37 nursing beds, common areas, and an underground parking garage to be located on an 12-and-a-half-acre site in the western Chicago suburb of Elmhurst.

The organization intends to issue unrated, fixed-rate bonds. A mortgage and revenue pledge will secure the bonds.

Edward Hospital won final approval for its refunding this month of up to $60 million of debt. The floating-rate bonds will carry a direct-pay letter of credit from JPMorgan Chase.

Edward, based in Naperville, carries long-term ratings of A2 from Moody’s and A-plus from Standard & Poor’s. Citi is the underwriter and Chapman is bond counsel.

Lake Forest Hospital received final approval for it private placement of $60 million of bonds with Northern Trust Co. Lake Forest, rated in the low single-A to mid-single-A category, will use proceeds to fund construction of an outpatient surgery center, radiation oncology center, observation beds, and other projects at its Grayslake facility, and others at its Lake Forest campus.

The system last month signed an affiliation agreement with Northwestern Memorial Healthcare. Jones Day is bond counsel.

Roosevelt University in Chicago also received final approval also for its sale of up to $210 million of new-money and refunding bonds.

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