Bangkok--16 Apr--Standard & Poor's
Standard & Poor's Ratings Services assigned its 'A+' underlying rating (SPUR) to the approximately $80 million Department of Budget and Finance of the State of Hawaii series 2009A and 2009B special-purpose revenue refunding bonds issued for The Queen's Health Systems (QHS). In addition, Standard & Poor's affirmed its 'A+' rating on QHS's series 2003A-C and series 2006A-C bonds and its 'A-1' short-term rating on QHS's taxable commercial paper (CP).
The 'A+' rating reflects a strong balance sheet with a significant investment and real estate portfolio with cash and investments of more than $500 million as of Jan. 31, 2009 (283.1 days' cash on hand) and real estate holdings with a land value of more than $500 million. In addition, QHS maintains a solid market position as Hawaii's second-largest health care system and reports increasing volume at the largest hospital in the state, The Queen's Medical Center. The system's debt burden is manageable with maximum annual debt service at 3.7% of total revenues and debt to capitalization of 38.9%. Continued operating profitability through fiscal 2009 with an operating income of $12 million (2.75% operating margin) through the seven months ended fiscal 2009 is an added credit strength.
The 'A-1' short-term rating is based on liquidity support provided by a $90 million line of credit dedicated to QHS's CP program provided by Wells Fargo Bank N.A., the Bank of New York Mellon, First Hawaiian Bank, and Bank of Hawaii and QHS's significant liquidity position.
Offsetting credit factors include strong dependence on rent and royalty revenue for operating profitability, the execution of its Waikiki properties redevelopment plan, and potential future capital needs.
"The stable outlook is based on our expectation that QHS will continue to maintain its strong balance sheet, solid operating performance, and manageable debt burden," said Standard & Poor's credit analyst Emily Wong.
No additional debt is expected. Total debt as of July 1, 2008, was $370.785 million ($295.655 million bonds and $75.130 million CP). QHS will use the series 2009A and 2009B bond proceeds to refund QHS's existing series 2003C and 2006C bonds.
RELATED RESEARCH
USPF Criteria: "Not-For-Profit Health Care," June 14, 2007
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Media Contact:
Ana Sandoval, New York (1) 212-438-5095, [email protected]
Analyst Contacts:
Emily Wong, New York (1) 212-438-6489
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]