Standard & Poor’s last week lowered its rating to BB-minus from BB on the Rhode Island Health and Educational Facilities Building Corp.’s $10.6 million of Series 1994 bonds issued for Westerly Hospital.
The downgrade reflects an extremely high operating loss in 2007, coupled with continued losses in the year to date, although management has made progress in reducing the deficits, and the balance sheet continues to weaken in terms of declining liquidity and an aging physical plant, analysts said. At the same time, the outlook remains negative since the overall audited trend of operational and financial performance remains depressed.
The BB-minus rating reflects a significant operating loss again in 2007, and although fiscal-year-to-date 2008 performance looks more promising with diminished losses, projected losses are still more consistent with a BB-minus rating.
In addition, although debt remains moderate, Standard & Poor’s said the continued weakening of the balance sheet in terms of a high average age of plant and decreasing liquidity, with many years of negative operations supported by a line of credit and operating reserves, are additional credit concerns.