UNC Rex Healthcare Series 2020A Tax-Exempt Fixed Rate Bonds

30 Jan

Case studies

UNC Rex Healthcare Series 2020A Tax-Exempt Fixed Rate Bonds

$199,725,000 Series 2020A Tax-Exempt Fixed Rate Bonds

About UNC Rex Healthcare

Rex Healthcare (“UNC Rex”), a member of the University of North Carolina Health Care System (“UNCHCS”), provides a wide range of primary, secondary and tertiary care services to residents of Wake County, North Carolina and surrounding counties, one of the fastest growing metropolitan areas in the country. Rex Hospital is licensed for 660 beds and treated 33,178 inpatients and 1,343,884 outpatients during FY 2019, supported by a medical staff of over 1,100 physicians. UNC Rex generated total operating revenue of approximately $1.2 billion and has total assets of $1.3 billion as of FYE 2019.

The Series 2020A bonds were sold to fund construction of UNC REX Holly Springs hospital, a free-standing 7-story bed tower with an adjacent 1-story Central Energy Plant, located on the existing property in Holly Springs and fund construction of UNC REX Outpatient Cancer Center, a 4-story medical office building across from the main campus of UNC REX Hospital.

Pricing Results

Credit Ratings: AA-/A2/NR


Focus on Value

Ponder & Co. (“Ponder”) has advised UNC Rex and the University of North Carolina Hospitals at Chapel Hill System (“UNCH”) since 2015 and has worked closely with management to plan and execute the sale of its 2020 publicly offered fixed rate bonds. The 2020 financing is part of a longer term System strategy to position UNC Rex for the future as it embarks on a large building plan.

Ponder worked extensively with management and led the deal team as it planned and executed the financing, from the initial rating agency meetings to the investor marketing process. Core to the UNC Rex message was explaining to the market the fact that despite different Obligated Groups, UNCH and UNC Rex operate as one system. Despite the different ratings and investor demand, it is clear from the results that key market participants understood the benefits of being a core part of the UNCHCS.

As the positive marketing message was relayed to key investors, orders flowed in, allowing Rex to generate over $1.4 billion of orders for the $200 million transaction and achieve an all-in cost of capital of 2.97% for its tax-exempt bonds (average life: 21.8 years). Rex benefited from extremely attractive market conditions with MMD, the AAA municipal market tax-exempt index, achieving historic lows for all maturities longer than 10 years on the day of pricing. Throughout the process, Ponder served as UNC Rex and UNCH’s sole advisor ensuring attractive market access, optimal demand and an all-time low cost of capital.

Comparable Bond Sales