Bangkok--17 Mar--Standard & Poor's
Standard & Poor's Ratings Services revised its rating outlook to stable from negative on Alaska Industrial Development and Export Authority's debt issued on behalf of Greater Fairbanks Community Hospital Foundation.
At the same time, Standard & Poor's affirmed its 'A' underlying rating (SPUR) on the authority's series 2004 bonds issued for the hospital foundation. Approximately $28.9 million of the 2004 bonds, which had been previously issued as index-put bonds, are being converted to fixed-rate debt with a final maturity of April 1, 2019. Standard & Poor's also assigned its 'A' SPUR to the authority's approximately $80.2 million series 2009 variable-rate demand bonds, issued on behalf of the foundation. The foundation owns Fairbanks Memorial Hospital/Denali Center (FMH/DC).
The series 2009 bonds will be supported by direct-pay letters of credit. The final long-term rating will employ low-correlation joint criteria. The foundation will use the series 2009 bonds to refund the remaining series 2004 bonds.
Credit strengths include a strong business position, as illustrated by FMH/DC's sole community provider status and strong market share in an exceptionally large geographic area. In addition FMH/DC reports a good balance sheet, highlighted by solid liquidity (although cash levels have declined somewhat) and modest leverage. FMH/DC's improved financial profile, as evidenced by the fiscal 2008 3.6% operating margin, equal to 2.4x pro forma maximum annual debt service coverage and a lease agreement with Banner Health (AA-/Negative), which provides an experienced management team, are added credit strengths.
"The outlook has been revised to stable, reflecting FMH/DC's improvement in operating performance, general stability of unrestricted cash and investments, and lack of additional debt plans," said Standard & Poor's credit analyst Kevin Holloran. "The rating remains supported by a strong business position and ability to ably service debt payments and, given its market position, FMH/DC should be able to generate consistently positive operating results," said Mr. Holloran.
In addition, a new physician strategy and the expectation of medical staff growth should position the organization to maintain its margins. Any unwinding of the lease agreement with Banner Health would trigger a review of the rating.
The bonds are secured by payments made by FMH/DC to the foundation pursuant to the lease, which includes basic rental payments, together, if necessary, with earnings on the foundation's investment portfolio and certain other foundation revenues and reserves.
Complete ratings information is available to RatingsDirect subscribers at www.ratingsdirect.com. All ratings affected by this rating action can be found on Standard & Poor's public Web site at www.standardandpoors.com; select your preferred country or region, then Ratings in the left navigation bar, followed by Find a Rating.
Media Contact:
Ana Sandoval, New York (1) 212-438-5095, [email protected]
Analyst Contacts:
Kevin Holloran, Dallas (1) 214-871-1412
Geraldine Poon, San Francisco (1) 415-371-5078
Key Contacts:
Americas Media Relations: (1) 212-438-6667
media_ [email protected]
Americas Customer Service: (1) 212-438-7280
[email protected]