NEW YORK - Moody's Investors Service said it has downgraded the underlying rating on Zale Lipshy University Hospital (Dallas, Texas) to Ba3 from Baa2.
The rating outlook is negative. At this time Moodys said it is removing the rating from Watchlist where it was placed on May 14. Approximately $49 million of series 1997 bonds are outstanding; the bonds are insured by FSA and carry a primary rating of Aaa reflecting FSA's current claims-paying rating.
Zale Lipshy University Hospital (ZLUH) is the only obligated member on the series 1997 bonds, however, Moody's said its rating assessment reflects the combined enterprise of ZLUH and St. Paul University Hospital (SPUH), whose fixed assets were purchased by University of Texas Southwestern Medical School on December 15, 2000.
The change in Moodys analytical approach was prompted by recent actions which transferred a sizable amount of cash out of ZLUH to its parent holding company which then ultimately transferred the funds to SPUH.
The downgrade to Ba3 reflects the combined enterprise's very weak cash position and growing deficits with both ZLUH and SPUH reporting sizable operating losses.
