Trinity Health System plans to sell $350 million in multi-state deal

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Michigan-based Trinity Health System plans to sell roughly $350 million of new-money and refunding bonds Wednesday through multiple state issuing authorities.

The system plans to also convert $175 million of outstanding privately-placed bonds issued through the Michigan Finance Authority in 2013 and 2016 to floating-rate notes that will be publicly remarketed.

“With all eyes on the Fed, long term rate are still below historical averages,” Dina Richard, senior vice president, treasury and chief investment officer at Trinity Health, said in an investor presentation referring to the Federal Open Markets Committee position on raising the federal funds rate.

Proceeds from the bulk of the bond issue — $300 million — will be used to reimburse the hospital chain for various capital projects. The remaining amount will be used to current refund outstanding fixed-rate bonds for a savings, Richard said.

Trinity Health is rated Aa3 by Moody’s Investors Service, AA-minus by Fitch Ratings and S&P Global Ratings.

Goldman Sachs and Bank of America Merrill Lynch are co-senior managers. Cabrera Capital markets LLC and Loop Capital Markets are co-managers.

Melio and Company is the advisor and Hawkins Delafield & Wood LLP is bond counsel.

The system will issue roughly $272 million of bonds through the Michigan Finance Authority, $35 million through the Idaho Health Facilities Authority, and $52 million via the Saint Mary Hospital Authority in Pennsylvania.

The system is accessing the market after reporting a 50% increase in operating income in fiscal 2018 to $401 million. Operating revenues also grew to $18.3 billion from $17.6 billion.

“Our net revenue grew $718 million or almost 4% and our expense growth was contained to $583 million or about 3.3%” said the system's chief financial officer and treasurer, Ben Carter.

The system spent $177 million in acquisitions in fiscal 2018 which is mostly attributed to its MacNeal Hospital acquisition by the system’s Chicago-based Loyola Medicine. MacNeal is located near Trinity’s Loyola Medicine teaching hospital, which should help Trinity improve market share and rationalize some services in that market.

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Not-for-profit healthcare Revenue bonds Primary bond market Michigan Finance Authority Idaho Health Facilities Authority Michigan Idaho Pennsylvania