Category: White Papers

Swap Strategies to Bolster Liquidity

With long-term swap rates at historic lows, health systems with sizable fixed payer swap portfolios may now be required to post substantial amounts of collateral. Combined with other liquidity draws (in particular equity portfolio losses and operating pressure due to the COVID crisis and loss of electives), the requirement to post collateral poses a potentially … Continued

COVID Impact on Hospitals and Health Systems

Not-for-profit hospitals and health systems could experience a drop in their liquidity of 40-to-60 days cash on hand due to COVID-19’s two-front war of significant declines in volume, combined with the steep equity market decline, including the Dow’s worst first-quarter performance ever. On January 20, 2020, the first positive case of coronavirus was confirmed by … Continued

The Latest on LIBOR Phaseout

In August 2017, Ponder published a paper, “What you need to know before LIBOR disappears”, outlining the uncertainties surrounding the eventual discontinuation of LIBOR. Since that paper was published, there have been some important developments related to a LIBOR phase-out. SOFR (“Secured Overnight Financing Rate”) has been designated by the Alternative Rate Reference Committee (ARRC) … Continued

Hospital M&A: Beginning of a New Frontier?

Imagine reading the following headlines five years ago: Six multi-billion dollar NFP-to-NFP health system mergers announced over past 12 months. Consolidation activity involving large community hospitals and regional health systems doubles. Only one transaction by a publicly traded FP acquirer not named HCA Healthcare in the calendar year; divestitures by FP increased fourfold. For the … Continued

The Impact of Tax Reform on the Municipal Market

While private activity bonds have been spared, the 2017 Tax Cuts and Jobs Act (the “Act”) will still impact tax-exempt markets The decrease in the corporate tax rate will reduce demand for tax-exempt bonds The decrease in supply due to the loss of advance refunding bonds will be offset by the reduced demand Publicly issued … Continued

End of LIBOR Part 1

What you need to know before LIBOR disappears – Impact on Swaps and Variable Rate Debt The History The LIBOR scandal that emerged in 2008 highlighted a crucial flaw in the setting of LIBOR rates. Without enough direct trades from which to draw, some traders responsible for setting the rates via daily submissions were actually … Continued

Challenges in Public and Private Variable Rate Debt

Currently, there is a dislocation between SIFMA resets and its theoretical relationship with 1 month LIBOR Pre-2008 financial crisis, SIFMA reset between 60% and 70% of 1mL The current SIFMA / 1 month LIBOR ratio is approximately 86% Impact on SIFMA market is primarily a function of the decrease in demand due to Money Market … Continued

Mergers & Acquisitions in the Hospital Industry

Since the beginning of 2010, mergers and acquisitions activity in the acute care sector has increased significantly. The rate at which hospital transactions are being announced has increased by over 50% in less than a year and a half. Activity is up significantly for both not-for-profit and for-profit healthcare systems. Internal discussions about potential consolidations, … Continued