Kennedy Health System of Cherry Hill, N.J., will go to the market on Thursday when the New Jersey Health Care Facilities Financing Authority issues $67.3 million of tax-exempt revenue and refunding bonds.
Proceeds of the offering will refund Series 1997A bonds and Series 2001 bonds, all of which the authority issued, and will finance capital projects to benefit the health system’s three campuses near Philadelphia.
Lancaster Pollard & Co. is lead manager. Powell Capital Markets Inc. and Raymond James | Morgan Keegan are co-senior managers.
The bonds will mature from 2013 to 2042.
Jason Thompson, a fixed-income sales associate for health care-oriented Lancaster Pollard, called the timing “a perfect storm” for the hospital.
“Going back a year or a year and a half ago, there was not as much demand. But now, when I deal day to day with investors, I see demand for paper. The demand, combined with the lower interest rates, puts the hospital in position for the lowest possible costs,” Thompson said.
Moody’s Investors Service affirmed its A3 rating and stable outlook for the bonds. Moody’s last November lowered the rating from A2, saying capital spending eroded cash balance “to a level not consistent with the A2 rating level.”
In its most recent report, Moody’s cited volume growth and new management’s focus on revenue cycle and managed care contract negotiations as driving Kennedy’s improvement.
“Management is on track for an upgrade if they continue on their current path,” said Lancaster Pollard senior vice president Ken Gould.
The health system’s strengths include affiliations with the University of Pennsylvania Health System for cancer care, Thomas Jefferson University for neurosur
gery and the Rothman Institute for orthopedics, all of which help it compete in the competitive Philadelphia region, Moody’s said.
Kennedy University Hospital has campuses in Cherry Hill, Stratford and Turnersville, N.J.
Capital improvements include expansion of the oncology facilities and construction of a C-section room in Turnersville, and emergency room renovations in Cherry Hill and Stratford.
Gould said the bond sale comes amid the “strongest possible health care market for rated credits.”
He added, “From a marketplace standpoint, forward-looking organizations that develop flexible but forward-looking strategic plans are in the best positions to succeed.”
GluckWalrath LLP of Trenton, N.J., is bond counsel. Ballard Spahr LLP of Cherry Hill represents the underwriters.