Montefiore Medical Center Series 2020A and 2020B Bonds

7 Feb

Case studies

Montefiore Medical Center Series 2020A and 2020B Bonds

$356,510,000 Series 2020A Tax-Exempt Fixed Rate Bonds

$350,000,000 Series 2020B Taxable Fixed Rate Bonds

About Montefiore Medical Center

With a history dating to 1884, Montefiore Medical Center (“MMC”) is the primary operating corporation in an integrated academic health care system that serves the Bronx, Westchester, Rockland and Orange Counties, New York. MMC operates three inpatient acute care facilities located on three campuses in Bronx County, New York, as well as numerous ambulatory care and outpatient facilities. Other System entities, outside the Obligated Group, 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). The System recorded total operating revenue of $5.9 billion and had $5.4 billion of total assets as of FYE2018.

Pricing Results

Credit Ratings: BBB/Baa3/NR


Focus on Value

Ponder & Co. (“Ponder”) has advised MMC since 2017 and led the MMC deal team as it developed, executed and implemented the Series 2020 financing. The financing is part of a longer-term strategy (including MMC’s IPO in 2018) to position the System for the future as it continues to expand into a regional health system.

Before coming to market, Ponder worked with MMC’s management team to review its strategic goals and hone its long-term plan. MMC had initially planned only to issue its 2020A bonds to finance its White Plains Hospital expansion project. However, it increased the overall offering size through the addition of the 2020B bonds to take advantage of attractive market levels while maintaining its BBB category ratings. Ponder spent considerable time with management in honing its rating agency strategy, including taking advantage of key assessment services. Ponder led the deal team on an expedited schedule, executing the offering in under three months to access an attractive market at near all-time record low interest rates.

At pricing, Ponder worked with MMC to optimize demand through its marketing campaign and by utilizing a variety of bond structures: tax exempt premium (5%) and near par coupon bonds (3%), taxable bonds, and bond insurance on a portion of both series (the insurance saved MMC over $3.7mm on a present value basis). Of particular note, no healthcare entity has issued a larger 3% coupon bond than the insured 2050 maturity. Altogether, the bond offering allowed MMC to finance key capital needs and bolster its Balance Sheet at an attractive all-in cost of 3.17% for its tax exempt bonds (average life: 25 years) and 4.29% for its taxable 30-year bonds.

Comparable Bond Sales