Standard & Poor's Ratings Services said it has lowered its long-term rating and underlying rating to A from A-plus on Washington Health Care Facilities Authority's and the Oregon Facilities Authority's revenue bonds issued on behalf of PeaceHealth, Wash.
At the same time, Standard & Poor's assigned its A long-term rating to Washington Health Care Facilities Authority's $66.2 million refunding revenue bonds series 2014A and Oregon Facilities Authority's $41.7 million refunding revenue bonds series 2014A. The outlook on all these ratings is stable.
Standard & Poor's also affirmed its AAA/A-1-plus rating on PeaceHealth's series 1995, 2008A, and 2008B bonds based on the application of its joint criteria, low correlation methodology. The short-term component of the rating on the series 1995, 2008A, and 2008B bonds reflects the short-term rating on U.S. Bank. The long-term component of the rating on these issues reflects the application of the joint support criteria reflecting the letters of credit from the bank and PeaceHealth's own credit strength based on low correlation.
"The downgrade reflects the additional debt that has been added since our last review, a high debt burden for the rating, sharply increased capital expenditures plans for the coming years, and weak operational performance in fiscal 2013," said Standard & Poor's credit analyst Martin Arrick. "In addition, despite improvement in operating performance and cash flow in the first half of 2014, following implementation of management's sizable sustainability plan, maximum annual debt service coverage and lease adjusted MADS coverage remain below levels that are adequate for the prior rating combined with our expectation that further improvement in coverage is not likely over the near to medium term."
