Mosaic Health System Series 2019A Tax-Exempt Fixed Rate Bonds

4 May

Case studies

Mosaic Health System Series 2019A Tax-Exempt Fixed Rate Bonds

$228,975,000 Series 2019A Tax-Exempt Fixed Rate Bonds

About Mosaic Health

Mosaic Health System (“Mosaic” or “System”) is a Missouri based regional health care system serving the health needs of residents of northwest Missouri, northeast Kansas, southeast Nebraska and southwest Iowa. The System is nationally recognized for quality and value-based care and includes one long-term and three full-service acute care hospitals in St. Joseph, Maryville and Albany, Missouri, with an aggregate 499 licensed beds; over 50 clinic locations; home health and hospice services. As of April 1, 2019, Mosaic employed approximately 179 physicians, 70 other providers, and 3,385 support staff full time equivalent employees.

Comparable Bond Sales

Focus on Value

Ponder & Co. (“Ponder”) is pleased to have served as financial advisor to Mosaic Health System on debt and swap transactions since 2001. As part of Mosaic’s strategic plan, the System expects to utilize a combination of debt and cash from operations to fund various projects. Bond proceeds generated by the Series 2019A bonds will finance or reimburse the costs of acquiring, constructing, remodeling, renovating and equipping certain health facilities, to refund certain outstanding bonds and finance a related swap termination payment. This is Mosaic’s first public market bond issuance since 2012.

Since 2009, Mosaic has taken advantage of low interest rates available through variable rate and direct placement debt for much of its capital structure. With current tax-exempt fixed interest rates near historic lows, Mosaic took advantage of a unique opportunity to refund all $135 million of its variable rate and direct placement debt to a fixed interest rate structure resulting in the elimination of put and renewal risks.

Ponder worked with Mosaic on all aspects of the financing, beginning with plan of finance development, through credit presentations and ending with bond pricing. On the days of pre-pricing and pricing, Ponder’s pricing desk worked closely with JPMorgan as Mosaic’s underwriter to structure the bonds with an attractive fixed rate cost of capital in a favorable market environment. Opportune market timing coupled with investor marketing and credit support strategies led to strong investor demand. Ponder provided guidance that resulted in a mixture of 5.0% coupon (serial) and 4.0% coupon (term) bonds to secure an all-in TIC (True Interest Cost) of 3.50% for a 35-year fixed rate financing.

Pricing Results:

Credit Ratings: A1/NR/AA-
Mosaic pricing results