Fitch Ratings this week placed the long-term underlying AA-minus rating on $757 million of debt sold for Novant Health System on rating watch evolving.

The debt, issued as health care revenue bonds, was sold by the North Carolina Medical Care Commission.

Fitch’s action follows Novant’s investment in seven hospitals owned by Health Management Associates Inc. Fitch rates HMA B-plus.

Novant has entered an agreement to buy a 27% interest in seven North Carolina and South Carolina hospitals owned and operated by HMA. The cost is $300 million in cash. The hospitals are strategically distributed throughout Novant’s service areas and range in size from 70 to 125 beds.

Analysts said the likelihood of a rating change is low. Furthermore, if the rating was changed, it would likely move no more than one notch in either direction. Fitch expects to complete its review of Novant’s rating and the effect of the transaction in the next few weeks.

Also this week, Standard & Poor’s revised its outlook for Novant’s debt to negative from stable and affirmed its AA-minus/A-1-plus ratings for the system.

Last year, Fitch revised its outlook on bonds to stable from positive following Novant’s announcement that it would purchase MQ Associates Inc. and its subsidiary MedQuest, a multi-state diagnostic imaging services provider.

Subscribe Now

Independent and authoritative analysis and perspective for the bond buying industry.

14-Day Free Trial

No credit card required. Complete access to articles, breaking news and industry data.