Sentara Healthcare Series 2020 Tax-Exempt Fixed Rate Bonds

16 Jan

Case studies

Sentara Healthcare Series 2020 Tax-Exempt Fixed Rate Bonds

$186,970,000 Series 2020 Tax-Exempt Fixed Rate Bonds

About Sentara Healthcare

Sentara Healthcare (“Sentara”) is the controlling entity of an integrated healthcare delivery system that provides a comprehensive array of healthcare services in (a) its primary service area of Hampton Roads, an approximately 1,600 square mile area in southeastern Virginia where Sentara controls seven hospitals, (b) its secondary service area known as the Blue Ridge Service Area, where Sentara controls the Sentara RMH Medical Center (formerly known as Rockingham Memorial Hospital) in Harrisonburg, Virginia, and Martha Jefferson Hospital in Charlottesville, Virginia, and (c) several additional service areas throughout Virginia and North Carolina.

Sentara has operating revenues of $6.3 billion and provides a complete array of healthcare services and specialties throughout Virginia and North Carolina. In 2019 Sentara was selected as the lead position in “10 CEO’s Transforming Healthcare” for pioneering Integrated Health.

Sentara also provides to its communities home health services, transportation services, pharmacy and infusion services, and hospice. Sentara controls Sentara Medical Group which practices throughout Virginia and North Carolina and employs 597 physicians.

Pricing Results

Credit Ratings: Aa2/AA (Moody’s/S&P)


Focus on Value

Ponder & Co. (“Ponder”) worked closely with Sentara management and governance during the past six months to plan and execute the sale of a publicly-offered fixed rate bond issue for refunding Sentara’s existing callable long-term debt.

Ponder worked with Sentara management to review plan of finance structures that would maximize debt service savings by taking advantage of today’s low rates and diverse couponing structures. To achieve this, Ponder pushed for incorporation of 3% coupons, lowering the yield to maturity of the bonds. Ultimately, Sentara was able to price in $33.1mm of 3% coupon bonds maturing in 2040, and saw 2.9x subscription for the bonds.

Ponder supported Sentara through all aspects of the financing, including plan of finance development, rating agency call preparation, and working with underwriters to achieve the most favorable bond sale pricing.

On pricing day, Sentara received strong demand with up to 10.1x subscription of final orders from over 45 unique investors. With high demand credit spreads were able to be tightened by 2 to 8 bps on average. Sentara locked in present value debt service savings of nearly $50mm with an all-in cost of capital near 2.80%.

Comparable Bond Sales