Honor Health Series 2019 A, B and C

30 Jan

Case studies

Honor Health Series 2019 A, B and C

$195,775,000 Series 2019A Tax-Exempt Fixed Rate Bonds
$45,135,000 Series 2019B Tax-Exempt Put Bonds
$50,470,000 Series 2019C Tax-Exempt Floating Rate Notes

About HonorHealth

HonorHealth, together with its affiliates, owns and operates a healthcare system of five acute care hospitals that serves the Northern Phoenix/Scottsdale, Arizona area. HonorHealth operates a total of 1,374 licensed beds and a stand-alone emergency services center. HonorHealth traces its roots to the 1950s but was formed on September 13, 2013 when the Corporation entered into an affiliation agreement with Scottsdale Lincoln Health Network (“SLHN”) and John C. Lincoln Health Network (“JCLHN”) and effective January 1, 2015, SLHN and JCLHN were merged into HonorHealth. HonorHealth has approximately 3,400 affiliated physicians and advanced practitioners and 11,200 employees, which makes HonorHealth Arizona’s eighth largest employer.

Focus on Value

Ponder served as financial advisor to HonorHealth for its Series 2019A-C Revenue Bonds. The capital projects to be paid for with proceeds of the Series 2019A-C Bonds will enable HonorHealth to build its Sonoran Medical Center campus in the northwest area of the greater Phoenix MSA and provide more efficient and convenient access to its broad range of inpatient and outpatient services for the area’s growing population. HonorHealth also achieved over $2 million of annual cashflow savings through refinancing two series of debt. Ponder worked with HonorHealth on both its rating agency strategy (which maintained its “A2 /A” rating from Moody’s and Fitch and received a positive outlook from Fitch while increasing its debt burden) and its investor presentation which was viewed by over 35 investors and in-person roadshow which was attended by over 20 investor groups.

The robust marketing strategy and compelling story of HonorHealth’s success paid off as the issue saw investor subscriptions of 7.7x (over $2 billion in orders). The bond issue was well received, with 48 investors (36 were first time buyers) participating, and due to the level of oversubscription, HonorHealth was able to lower yields 2-12 basis points for all maturities. Approximately $100 million of 6 yr put bonds and 6 yr FRNs were structured to take advantage of lower rates and some variable exposure to align with future call dates. HonorHealth was able to achieve a TIC of 3.726%.

Pricing Results:

Credit Ratings: A2 / A

Pricing Results for Honor Health Series 2019A B and C

Comparable Bond Sales:

 

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