DALLAS — A year after completing its move to the former Fitzsimons Army Hospital campus in Aurora, Colo., the University of Colorado Hospital Authority will issue $92.6 million of variable-rate revenue bonds for construction and refunding.
The bonds will be issued this week in two pieces: a $19.1 million Series A for capital projects, and a $73.5 million Series B that will refund a 2007 auction-rate issue.
Citi serves as senior manager on the deal, with Kaufman Hall as financial adviser.
The bonds initially bear interest at a weekly rate, but may be converted to a daily long-term indexed put rate, or bond interest term rate, officials said.
Fitch Ratings provided a AA-minus based on a letter of credit from Wachovia Bank NA. Moody's Investors Service has rated the underlying credit Baa1 with a stable outlook. Analysts also affirmed the ratings for the authority's $458 million of outstanding debt.
Moody's analysts called the authority's high debt load a "key credit concern."
"With an 87% increase in leverage over the last three years, we believe that UCH has reached a level of debt that is high given both the size of its balance sheet and its current operating capacity," analysts wrote.
The hospital authority is also counterparty to three swap agreements: a 2003 fixed-to-floating rate swap for $50 million that ends in 2010, a 2004 floating-to-fixed-rate London Interbank Offered Rate swap of $110 million, and a 2007 floating-to-fixed rate Libor swap on $72.8 million.
Citi is counterparty to all of the authority's current swaps. Financial Security Assurance insures the 2004 agreement. For the 2003 and 2007 swaps, Citi can end the deal and force the authority to cover the loss if it falls below Baa3, or if cash on hand falls below 90 days. The swaps, including the 2007 deal that will remain after the refunding, represent 42% of outstanding debt, Moody's said.
"Moody's views UCH's distinct role as the only academic medical center in the state and the primary teaching facility for the University of Colorado at Denver as a credit strength despite its relatively weak, though growing, market share position in the very competitive Denver health care market," analysts wrote.
One year ago, Hospital Authority completed its move to the former Fitzsimons Army Hospital, six miles east of downtown Denver. Now known as the Anschutz Medical Campus for benefactor Philip Anschutz, the campus represents $2.1 billion of investment over the past eight years. The site includes the University of Colorado Hospital at a cost of $646 million, the Children's Hospital for $569 million, and the University of Colorado at Denver for $950 million.
A light-rail line from downtown Denver to the campus is in the planning stage, as state and city money has helped develop the campus in a relatively poor section of Aurora. The University Hospital formerly located near several others on the edge of Denver's Capitol Hill neighborhood has closed.
