Children’s Healthcare of Atlanta Series 2019A-C and Series 2019D
$893,270,000 Series 2019A-C Tax-Exempt Fixed Rate Bonds
$109,885,000 Series 2019D Tax-Exempt Variable Rate Demand Bonds
About Children’s Healthcare of Atlanta
Children’s Healthcare of Atlanta and its affiliates (“Children’s”) comprise one of the largest pediatric clinical care providers in the country. Children’s is located in Atlanta, Georgia with physicians representing more than 60 pediatric specialties with emphasis in cardiac care, hematology/oncology, orthopedics, and brain health. In 2016, management approved a new hospital campus in North Druid Hills. The campus, comprised of 76 acres, with 20 acres reserved for greenspace, will relocate the current Egleston services once complete. The new 20- story hospital will include 446 beds and a 12-story medical office building. Children’s ranks in each of the 10 specialty areas for U.S. News & World Report Best Children’s Hospitals 2019-2020, and five specialty areas at Children’s ranked among the top 10 in the nation. Children’s is one of the strongest healthcare credits with consistent operating cashflow margins greater than 18%, days cash on hand over 1,100 days, and MADS coverage in excess of 7x.
Comparable Bond Sales
Focus on Value
Ponder & Co. (“Ponder”) worked closely with Children’s management and governance during the past twelve months to plan and execute the sale of a transformational financing for the North Druid Hills campus and a restructuring of virtually all their existing debt. This financing represents the first public offering for Children’s since 2009 and represents the largest stand-alone pediatric financing offered with over $1billion raised in the taxexempt market. The publicly-offered bond issue provided funds for (1) new money financing of the 446-bed hospital and supporting buildings on the new campus and (2) refunding and restructuring of nearly all the existing bonds for savings and asset optimization. Ponder worked with Children’s management to review comprehensive plan of finance structures for the entire portfolio. The plan of finance focused on minimizing the risk profile of the capital structure resulting in 100% fixed rate debt, inclusive of swaps, lowering Children’s aggregate cost of capital by over 90bps, and optimizing the bond structures with the existing swap portfolio. Ponder assisted Children’s with all aspects of the financing, including facilitating RFPs for the underwriting team, bond counsel, and borrower’s counsel, plan of finance development, internal governance meetings, rating agency site visits, in-person investor meetings, and pricing guidance. On pricing day, Children’s received 6.0x oversubscription from 108 unique investors with greater than $6billion in orders, and credit spreads were tightened by 4 to 10 bps on various maturities. Furthermore, Children’s achieved a diverse coupon structure with $370mm of 5% coupon bonds, $424mm of 4% coupon bonds, and $100mm of 3% coupon bonds, for an all-in-TIC of 3.15%.
Pricing Results:
Credit Ratings: Aa2/AA+(Moody’s/S&P)
