Huntsville Hospital System Series 2020B

27 Oct

Case studies

Huntsville Hospital System Series 2020B

Pricing Date: October 13, 2020

$233,000,000 Series 2020B Bonds


The Huntsville Hospital System (“HHS”) wanted to take advantage of favorable market conditions to bolster its balance sheet, given recent and future project expenditures. In a growing market, HHS is in the process of augmenting its main campus with a new bed tower and parking garage, and acquiring other nearby facilities. HHS also wished to modernize its existing MTI to incorporate the latest provisions and more flexibility.


This was HHS’s first public market fixed rate transaction, having historically financed projects through cash flow, its commercial paper program and direct placements. In addition, the pandemic affected operations in the spring as well as during the resurgence in Alabama over the summer. As a Healthcare Authority, HHS is limited in eligible investments for its unrestricted cash reserves, hindering non-operating liquidity growth.


  1. CREDIT ANALYSIS: Upon its hiring in 2019, Ponder reviewed HHS’s credit profile based on historic, current and projected performance expectations. Ponder modeled multiple scenarios to determine the optimal balance sheet now and in the future, and then developed the optimal plan of finance to allow HHS to meet its goals.
  2. PLAN OF FINANCE: Given limited investment returns, strong liquidity metrics and low current market rates, a mix of commercial paper, a fixed rate direct placement and public fixed rate bonds were utilized (some with insurance).
  3. MASTER TRUST INDENTURE (“MTI”) MODERNIZATION: Ponder recommended and led a modernization of the existing MTI, which allowed HHS to create a more flexible and less restrictive document.
  4. RATING AGENCY PROCESS: With only one rating historically, Ponder reviewed the costs and benefits of adding a second rating, with HHS ultimately deciding on maintaining just its Moody’s rating. Ponder then assisted HHS through the rating process, which led to an upgrade in the outlook, despite significant negative sector pressure.
  5. EXECUTION: Led the entire deal team throughout the financing process.
  6. MARKETING: Drafted the investor presentation, led Q&A preparation, and advised on 1×1 investor calls.
  7. PRICING: Advised HHS through the pricing process, including adding Assured Guaranty on a portion of bonds to optimize the overall bond yield with 3% coupon debt, and achieving historically low yields across the curve.

About Huntsville Hospital System: A1 (Moody’s)

HHS is comprised of eleven hospitals, including its flagship, Huntsville Hospital. HHS is the leader in North Alabama and Southern Tennessee, with services across the full continuum of care including 5 urgent care centers, 316 health clinics, outpatient surgery centers, stand-alone imaging centers, labs, therapy centers and pharmacies. Finally, the System offers direct-to-consumer telemedicine solutions, and is well positioned to handle the changing healthcare landscape.

Pricing Results:

Huntsville Hospital Pricing Results

Comparable Bond Sales:

Huntsville Hospital Comparable Bond Sales