Altru Health System Series 2021 Bonds

14 Sep

Case studies

Altru Health System Series 2021 Bonds

Pricing Date: September 9, 2021

Closing Date: September 28, 2021

$400,000,000 Series 2021 Bonds


Altru Health System (“Altru”) sought to finance its replacement hospital project and lower the cost of its existing debt. By issuing long-term fixed rate tax-exempt bonds, Altru hoped to achieve a low cost, low risk capital structure, and a flexible covenant package.


  1. Significant increase in leverage (doubled)
  2. Weaker financial performance had led to multiple rating downgrades prior to turnaround efforts started in FY2020
  3. Construction stoppage in FY2020 for COVID-19 escalated project costs and scope
  4. No Guaranteed Maximum Price at bond pricing


  1. Plan of Finance: Ponder had worked with Altru since 2018 on various steps to position it for the 2021 financing: including de-risking its capital structure to remove problematic loans during a financial performance downturn, sourcing bridge financing to begin project construction, and advising on long-term private placement refinancing to allow time for a financial turnaround. The 2021 plan of finance locked in low cost long-term tax-exempt public fixed rate debt to fully fund the new hospital and refinanced outstanding debt for significant cashflow savings.
  2. Financial Projections in POS: To provide key partners with confidence that Altru’s financial turnaround was sustainable and its increased leverage affordable, a third-party firm was engaged to provide 10-year financial projections reflecting solid financial performance post construction
  3. Bond Insurance: Assured Guaranty was utilized to provide bond insurance on targeted long dated term bonds, bifurcating them with 3% insured coupons vs 4% uninsured coupons to increase demand and to lower yields
  4. Locked in Low Long-Term Rates: Altru secured a 30-year level debt cost of capital of 2.79% (All-in TIC)

About Altru Health Systems: ‘Baa2/BBB-’ (Moody’s/Fitch)

Altru Health System is headquartered in Grand Forks, North Dakota serving as the regions fully integrated healthcare delivery system and regional referral center for more than 20,000 square miles across 17 counties from northeast North Dakota to northwest Minnesota. Altru’s 257 licensed bed flagship hospital, Altru Hospital. is the largest inpatient facility in Altru’s service area, at more than twice the size of its nearest competitor. Altru’s other facilities include 40 licensed bed Altru Specialty Center and ten branch clinics that provide a full range of clinical services throughout the region.

Pricing Results Series 2021:

Altru Series 2021 Pricing Results

Comparable Bond Sales:

Altru Series 2021 Comparable Bond Sales