Seattle Children’s Hospital Series 2021 Taxable Bonds
Pricing Date: February 4, 2021
$402,075,000 Series 2021 Taxable Bonds
7 yr Bullet Maturity: 2027
30 yr Bullet Maturity: 2050
Objectives
Seattle Children’s Hospital (“SCH”) sought to take advantage of the current low-rate environment to reimburse the organization for the expansion of its main campus through “Building Care” and refund existing debt to generate cash flow savings.
Challenges
- 2020 was a challenging year given the pandemic headwinds that immediately followed the February reopening of operating rooms previously closed due to the presence of Aspergillus in 2019.
- SCH management successfully communicated its forward-looking strategy to strengthen operations through cost containment and accretive investments in Building Care. SCH maintained its ‘Aa2/AA’ ratings by Moody’s and Fitch.
Solutions
- Crafted a strategic Rating Agency approach: Management communicated a robust COVID response, as well as multi-year financial projections demonstrating SCH’s ability to absorb additional debt and bolster operations.
- Marketing and designation as Green Bond: Given the nature of the projects being financed including LEED building certification and commitment to being carbon neutral by 2025, SCH was able to market the entire transaction as a Green Bond. SCH saw strong investor demand with over 8.6x initial subscription from 95 unique investors and was able to lower credit spreads by 17-25 basis points.
- Record low spread for taxable NFP healthcare: The final 30yr credit spread of +78 basis points is the lowest ever recorded 30yr taxable credit spread achieved among not-for-profit healthcare. Furthermore, SCH locked in $37.8mm of net present value savings through refunding Series 2010 and 2012 bonds.
About Seattle CHildren’s Hospital: Aa2/AA (Moody’s/Fitch)
SCH is a Washington nonprofit corporation that operates a flagship hospital in Seattle, as well as nine regional clinics located throughout Washington, and one regional clinic in each of Montana and Alaska. SCH staffs eight neonatal intensive care units and four pediatric inpatient units in hospitals in the greater Puget Sound area. Also, SCH has established Seattle Children’s Care Network with 14 community-based primary care practices comprised of 120 pediatricians in Washington. Through its affiliation with Children’s University Medical Group, Seattle Children’s provides pediatric specialty services at numerous other outreach clinics located throughout the Pacific Northwest.
Pricing Results:
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