Montefiore Health System Series 2018 A,B & C

25 Jul

Case studies

Montefiore Health System Series 2018 A,B & C

Series 2018A $309 million
Series 2018B $376 million
Series 2018C $482 million

About Montefiore Health System

Montefiore Health System is an integrated academic health care system serving the Bronx, Westchester, Orange and Rockland Counties in New York. Montefiore Medical Center is the flagship of the System and the sole member of the Obligated Group. With a history dating to 1884, MMC operates three inpatient acute care facilities located on three campuses in Bronx County, as well as numerous ambulatory care and outpatient facilities. In addition, the System includes other entities which own and operate five inpatient acute care hospitals, an inpatient rehabilitation hospital, a skilled nursing facility, numerous outpatient facilities, and a medical school (The Albert Einstein College of Medicine). For the year ended December 31, 2017, MHS and its consolidated subsidiaries, which includes all of the affiliated hospital corporations, recorded total operating revenue of $5.5 billion

Focus on Value:

Ponder served as financial advisor to MHS for its inaugural system financing. The three part bond issue raised over $1.2 billion in proceeds to repay existing debt, recapitalize the Balance Sheet and fund certain capital expenditures. After over two decades in the FHA program, this was the first transaction for the health system based on its own credit.

Ponder assisted MHS from the outset, including through the rating agency process which ultimately secured strong system ratings. Ponder also advised MHS through a multi-state road show in order to optimize demand for the brand new credit. In addition, Ponder helped structure the overall financing, including 3 series of bonds: 2018A Tax Exempt bonds, 2018B Taxable bonds issued through DASNY (to take advantage of the State tax exemption, bond insurance and an optional call feature), and 2018C Taxable bonds issued directly by MHS.

At pricing, Ponder worked with MHS and its underwriters in developing a specific couponing structure, including a substantial use of 4.00% coupons which save 20+ basis points on a yield to maturity basis. On the taxable bonds, the carve out of a shorter maturity helped save MHS 15 basis points on $70 million of bonds. The deal was well received by investors and resulted in an attractive all in cost of funds for MHS.

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