Beaumont Spectrum Consolidation Series 2022A and 2022B

13 May

Case studies

Beaumont Spectrum Consolidation Series 2022A and 2022B

Pricing Date: April 28, 2022

Settlement Date: May 12, 2022

$799,000,000 Series 2022A Tax-Exempt Fixed Rate Bonds

$92,000,000 Series 2022B Tax-Exempt Fixed Rate Notes


In February 2022, Spectrum Health and Beaumont Health combined to create BHSH System (“BHSH”). For the inaugural financing, BHSH sought to consolidate legacy Beaumont Health debt into Spectrum Health’s capital structure and MTI during the acquisition financing window to streamline BHSH’s combined debt profile and achieve debt service savings.

Challenges and Opportunities

  1. Maintain historically strong ‘Aa3/AA’ credit ratings of legacy Spectrum Health given benefits of consolidation
  2. BHSH desired to utilize FY 2021 financials and lock in rates ahead of the May Fed meeting which required a condensed financing timeline
  3. Generate savings on legacy Beaumont debt refundings or opt for note substitution to consolidate legacy organizations’ debt
  4. Market volatility and inflation expectations caused interest rates and credit spreads to increase leading up to pricing

Solutions and Results

  1. Time to Market: Ponder worked with BHSH to develop and implement the financing in only 8 weeks from investment bank selection to pricing
  2. Marketing Strategy: Ponder supported BHSH in successfully introducing its new credit profile to the public market and communicating the value of its ‘For Michigan, By Michigan’ strategy to investors and rating agencies
  3. Plan of Finance: Given the volatile market, Ponder supported BHSH with analytics to continually evaluate the benefits of each component of the finance plan
    • Beaumont Refundings: Each refunding element was assessed separately and Ponder advised BHSH in optimizing the strategy for each series of legacy Beaumont bonds
    • FRN vs. Put Bonds: BHSH elected to combine $41 million of put bonds into variable FRNs given flat yield curve
    • Taxable Debt: BHSH intended to meet its needs for taxable refunding and new money through a public bond issue. As rates and credit spreads increased, Ponder worked with BHSH to evaluate alternative strategies to meet those needs
    • Pricing Results: BHSH secured an all-in TIC of 3.60% on the fixed rate transaction, achieved $44 million NPV savings, received 4.5x subscription on the bonds from 67 unique investors, and was able to lower final spreads by up to 7bps

About BHSH System: ‘Aa3/AA’ (Moody’s/S&P)

BHSH, a Michigan nonprofit corporation, was formed in February 2022 and is the largest nonprofit health care system in Michigan. BHSH operates an integrated health system consisting of 22 hospitals; over 300 ambulatory care and outpatient locations; 11,500 affiliated, independent and employed physicians and advanced practice providers; an award-winning insurance plan; and a full continuum of post-acute services.

Pricing Results Series 2022AB:

Beaumont Spectrum Series 2022AB Pricing Results

Series 2022A Fixed Rate Comparable Healthcare Issues:

Beaumont Spectrum Series 2022A Comparable Bond Sales


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