Standard & Poor's placed Palm Drive Health Care District, Calif.'s revenue debt on negative watch due to lack of timely information and warned that the already junk-rated securities could have their rating revoked.
The announcement affects $9.8 million of parcel tax revenue bonds issued in 2005 and $11 million of certificates of participation issued in 2010. The debt is already rated at only BB and had only been removed from negative watch in July 2014.
"This action follows repeated attempts by Standard & Poor's to obtain timely information of satisfactory quality to maintain our rating on the securities in accordance with our applicable criteria and policies," said S&P credit analyst Misty Newland.
The district filed for Chapter 9 bankruptcy in April 2014 and later that month closed its Palm Drive Hospital in Sebastopol, about 50 miles northwest of San Francisco. The district was still in bankruptcy as of a May 2015 bondholder notice posted on the Municipal Securities Rulemaking Board's EMMA website.
Standard & Poor's warned that it could withdraw the rating entirely.
"Failure to receive the requested information by Aug. 12, 2015, will likely result in our withdrawal of the affected rating, preceded, in accordance with our policies, by any change to the rating that we consider appropriate given available information," S&P said.
The district's financial disclosures on EMMA reveal that it had been operating at a deficit for some time, and the rising costs of providing care eventually became too great to overcome. The district said in those disclosures, however, that it expected to be able to continue to meet its debt obligations.
A call to the board of directors was not returned.
