KUHA Series 2019B Tax-Exempt Fixed Rate Bonds

22 Oct

Case studies

KUHA Series 2019B Tax-Exempt Fixed Rate Bonds

$125,440,000 Series 2019B Tax-Exempt Fixed Rate Bonds

About University of Kansas Hospital Authority (“KUHA”)

The University of Kansas Hospital Authority (“KUHA”) is a Kansas nonprofit corporation organized to own and operate the University of Kansas Hospital (the “KU Hospital”). The mission of KUHA is to improve the health of Kansans and to provide patient care in specialized services not widely available elsewhere to citizens of the State of Kansas.

KUHA has operating revenues of $2.7 billion. The KU Hospital is the flagship hospital for the University of Kansas Health System (“UKHS”), providing tertiary and quaternary care including cancer centers; imaging, lab and pharmacy locations; urgent care clinics; primary and specialty care clinics in the Kansas City metropolitan area and throughout its regional service area. KUHA cared for patients from all 105 Kansas counties, 108 of 114 Missouri counties, and served patients from all 50 U.S. states in fiscal year 2019. As part of a state wide strategy and consistent with the mission to provide healthcare throughout Kansas, KUHA owns and operates Hays Medical Center, Great Bend Regional Hospital, Pawnee Valley Hospital and is partial owner of St. Francis Hospital in Topeka, Kansas.

Pricing Results

Credit Ratings: AA-/AA- (S&P/Fitch)


Focus on Value

Ponder & Co. (“Ponder”) worked closely with KUHA management and governance during the past six months to plan and execute the sale of a publicly-offered fixed rate bond issue for refunding KUHA’s existing callable long-term debt.

Ponder worked with KUHA management to review plan of finance structures that would maximize debt service savings by taking advantage of today’s low rates and diverse couponing structures. To achieve this, Ponder pushed for incorporation of 3% coupons, lowering the yield to maturity of the bonds. Ultimately, KUHA was able to price in $17.3mm of 3% coupon bonds maturing in 2041, and saw 1.6x subscription for the bonds.

Ponder assisted KUHA with underwriter, bond counsel, and trustee RFP processes that decided the financing team. Ponder supported KUHA through all aspects of the financing, including plan of finance development, rating agency call preparation, selection of financing participants and working with underwriters to achieve the most favorable bond sale pricing.

On pricing day, KUHA received strong demand with up to 7.4x subscription of final orders from over 45 unique investors. Despite rates rising on the day, credit spreads were tightened by 2 to 5 bps on average. KUHA locked in present value debt service savings of over $30mm with an all-in cost of capital near 2.80%.

Comparable Bond Sales