Fitch Ratings assigned a AA-minus rating Wednesday to a planned $355 million bond issuance on behalf of Sacramento-based Sutter Health, which owns, leases and-or operates 31 hospitals.
The California Statewide Communities Development Authority will issue $37 million of debt and the California Health Facilities Financing Authority will issue $318 million of fixed-rate revenue bonds to be sold via negotiation the week of Dec. 5, according to the rating report.
Around $135.9 million of the proceeds will go toward Sutter's ongoing capital plan. The remaining $219 million will refund several bond series and certificates of participation issued through CHFFA. The bonds will have a 2035 final maturity.
Sutter had total revenues of $9.1 billion in fiscal 2010, according to the rating report.
Analysts attributed the rating to strong financial results that show significant profitability and cash-flow generation across the system.
They also cited Sutter's large regional presence and strong physician alignment platform.
While Sutter's three-year capital budget is sizable, Fitch analysts said the system's strong and consistent cash-flow generation will allow it to fund a majority of the expenditures through operations and afford it incremental room for additional debt capacity at the current rating level.
Following the issuance of the bonds, Sutter will maintain its 100% fixed-rate debt portfolio.
Management has no plans to issue any additional debt over the medium term, according to analysts.
Fitch also affirmed its AA-minus rating on $3.14 billion of outstanding revenue bonds issued on behalf of Sutter Health and gave the health care provider a stable outlook.
