Gunderson Series 2021A Tax-Exempt Fixed Rate Bonds

12 Aug

Case studies

Gunderson Series 2021A Tax-Exempt Fixed Rate Bonds

Bond Sale Date: July 14, 2021

Expected Closing Date: August 12, 2021

$99,550,000 Series 2021A Tax-Exempt Fixed Rate Bonds


Gundersen Health System (“Gundersen”) took advantage of historically attractive market conditions to refinance its Series 2011A bonds to significantly reduce interest expense. As part of the financing, Gundersen also implemented a new, more flexible Master Trust Indenture.

Challenges and Opportunities

  1. The Series 2011A bonds were callable as of October 15, 2021 and carried an average coupon rate of 5.22%, well above current interest rates
  2. As Gundersen had last accessed the public markets in 2012, there was opportunity to modernize the MTI to improve financial covenants and terms
  3. As interest rates trended lower leading up to pricing, coupon demand fluctuated prompting the need for diversification


  1. Assisted Gundersen in crafting an Amended and Restated Master Trust Indenture: Ponder led the team to establish more flexible terms in the MTI, materially improving financial covenants and providing for greater operational flexibility; coordinated the effort to secure required consent for the new MTI from other lenders as well
  2. Rating Agency Process: Assisted with the rating agency strategy and messaging to discuss impact of COVID-19; advised on removing the Moody’s rating to minimize cost without an impact on Series 2021A marketability
  3. Execution: Led the deal team throughout the transaction assisting with all aspects of the financing process to reintroduce Gundersen to the markets since their last public issuance in 2012
  4. Pricing: Worked with management and the banking team to advocate for low coupon bonds to reduce the yield to maturity (YTM) of the issue, by including 3% and 4% coupon bonds; 3% coupons provided up to 0.14% savings for YTM
  5. Results: Gundersen lowered its cost of capital from 5.22% to 2.16% (all-in TIC) on the Series 2021A fixed rate bonds and generated net present value savings on the refunding of over $38.6 million (33.43% of refunded par)

About Gunderson Health System (“Gunderson”): ‘AA- / AA-’ (S&P / Fitch)

Gundersen cares for patients in a 22-county service area in western Wisconsin, northeastern Iowa and southeastern Minnesota. Its services include medical clinics, a tertiary referral center, community hospitals, nursing homes, special needs housing facilities and medical transportation services. In addition, Gundersen has an ownership interest in a provider owned health insurance company.

Pricing Results:

Gunderson Series 2021A Pricing Results

Comparable Bond Sales:

Gunderson Series 2021A Comparable Bond Sales