Bangkok--8 Jul--Standard & Poor's
Standard & Poor's Ratings Services assigned its 'AA' long-term rating to California Health Facilities Finance Authority's $150 million series 2009B hospital revenue bonds issued on behalf of Washington-based Providence Health & Services (PH&S). In addition, Standard & Poor's affirmed its 'AA' long-term rating on the authority's previously issued debt for PH&S.
The rating reflects our view of PH&S's status as one of the nation's largest not-for-profit health care providers with more than $7 billion in annual revenues, demonstrating what we consider solid geographic and financial dispersion, a strong business position in all of its major markets, strong, solid, and consistent operating profitability for many years and a capable management team.
The major offsetting factor is a balance sheet that in our view is only adequate for the rating, partly due to recent investment market losses, combined with the emergence of significant liabilities in the PH&S pension plan over the fifteen-month period ended Dec. 31, 2008. The rating and stable outlook also reflect our assessment of numerous actions by management to address the pension issue quickly, and move its investment allocation to a more conservative footing as part of its efforts to preserve and subsequently boost liquidity in the future.
"The stable outlook reflects our view of PH&S's record of consistent operating performance, a strong business position, and good operating cash flow," said Standard & Poor's credit analyst Martin Arrick. "The stable outlook also reflects our belief that that any strategic growth will be consistent with management's intent to maintain a financial profile consistent with the 'AA' category," said Mr. Arrick.
Security for the bonds is a general obligation (GO) of the PH&S obligated group under the master trust indenture. PH&S is not a party to any swap contracts.
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:
Martin D Arrick, New York (1) 212-438-7963
Geraldine Poon, San Francisco (1) 415-371-5078