Mercy Health Series 2017C Revenue Bonds

Case studies

Mercy Health Series 2017C Revenue Bonds

About Mercy Health

Mercy, a Ponder client since 2008, is a $6 billion in revenue super regional health care system providing services in Arkansas, Kansas, Missouri, and Oklahoma. Mercy is headquartered in St. Louis and was started by the Sisters of Mercy over 150 years ago. Currently Mercy is the 5th largest Catholic health care system in the US with 44 acute care and specialty hospitals across its 4 state service area. In addition, its physician practice (Mercy Clinic) is staffed by over 2000 physicians and is the 4th largest clinic in the US.

Focus on Value

Ponder assisted Mercy with:

A $285mm public offering of Fixed Rate Bonds.

  • The 2017 bonds will be used to construct several clinics across the system as well as a new 44,050 sqft. multi-specialty clinic in Branson, Missouri.
  • The proceeds will also be used to acquire a freestanding emergency department in Edmond, Oklahoma, as well as primary care clinics in Edmond and Piedmont, Oklahoma.
  • Mercy will also currently refund its Series 2014D and Series 2014E bonds, each with principal amounts of $55 million.
  • Ponder assisted with the rating agency strategy that resulted in the removal of a negative outlook by S&P and affirmation by Moody’s.

The serial bonds saw strong investor demand with 9-10x oversubscription. Mercy desired sub 5% coupons to achieve the lowest yield to maturity. This resulted in $195mm bonds being sold with a 4% coupon or lower. Structuring included a 3.625% coupon in 2047, and 4.0% coupons in 2047 and 2049.

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