DCH Health Care Authority Series 2021A Bonds
Pricing Date: October 28, 2021
Closing Date: November 17, 2021
$31,555,000 Series 2021A Bonds
Objectives
The DCH Health Care Authority (“DCH”) took advantage of low tax-exempt interest rates to finance construction of a replacement parking garage at its Tuscaloosa Medical Center campus while also putting in place a new Master Trust Indenture.
Challenges
- Weaker FY2021 operating results due to labor pressures related to COVID-19
- Market dynamics: over the previous month leading up to DCH’s financing, tax-exempt interest rates indices and credit spreads continued to increase
- Bond market supply: the last two weeks of October saw an outsized number of healthcare issuers coming to market, making it harder to get investors attention
Solutions
- Rating Agency Process: Ponder worked with DCH to craft materials and messaging for the rating process
- Single Bond Rating: Ponder and the underwriter determined that having only one bond rating would not impact the pricing of the bonds while lowering cost of issuance expenses
- Marketing: Ponder advised throughout the marketing process including drafting of the investor presentation and investor Q&A preparation
- Master Trust Indenture: DCH was able to issue the 2021A Bonds under a new “state of the art” Master Trust Indenture which will eventually replace its 1987 Indenture when DCH’s existing bonds issued under it are refunded
- Pricing: DCH was able to navigate a turbulent market with increased supply to obtain a very attractive 30-year financing cost of 3.36% (All-in TIC) for its Series 2021A fixed rate bonds
About DCH Health Care Authority: ‘A’ (S&P)
DCH is headquartered in Tuscaloosa, Alabama, home to The University of Alabama. The cornerstone of the System is the DCH Regional Medical Center consisting of two hospitals with a total of 787 licensed beds located on campuses in Tuscaloosa and Northport, Alabama. DCH has total operating revenues of over $500mm for FY2021.
Pricing Results Series 2021A:
Comparable Bond Sales:
