Carson-Tahoe gets A bond rating

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Carson-Tahoe Hospital received an "A" rating Wednesday from Standard & Poor's, a financial bond-rating agency, as the hospital prepares to issue $40 million in bonds.

"We have yet to receive confirmation in writing, but we expect a fax today," said Chief Executive Officer Ed Epperson. "This is extremely good news, the best we had hoped for."

The rating attempts to classify the level of risk for any given investment and is pivotal to the hospital's ability to acquire the money it needs to become a private, nonprofit hospital.

Epperson said Carson-Tahoe has received an "A" rating the last couple of times the hospital went out for bonding, but according to recent figures, Standard & Poor's downgraded six nonprofit health systems last year for each one it upgraded, a concern for hospital officials.

Epperson said this is the highest rating hospitals generally are given. Based in Reno, Washoe Medical Center has also retained its "A" rating.

According to Michael Blair, Carson-Tahoe's chief financial officer, the interest rate for the bonds is expected to hover around 5.75 percent.

"This rating is very important because it dramatically affects the cost of capital," he said. "The higher the rating, the lower the interest rate."

If the interest rate is lower, the cost of that money is cheaper and in theory, that could give the hospital more purchasing power, according to Blair.

Zeigler Capital Markets Group of Chicago will be handling the bond transaction, which should take no more than a few days to complete, according to Epperson.

"We will be bonding for about $40 million," he said. "We will use the money to reimburse, or defease, the hospital's city-backed debt in addition to reimbursing our reserves for the land purchase and some of the capitol projects, like the new cath lab."

The land purchase refers to 65 acres in northwest Carson City, where Carson-Tahoe officials are planning to build a new Regional Medical Center. Acquiring a bond rating was the last major hurdle in Carson-Tahoe's transition to a private nonprofit corporation, but there are still a few issues, according to Blair.

Because the hospital is still city-owned, Carson City supervisors must approve purchase of the economic-revenue bonds. The transition effort will then go to the State Board of Finance Monday for consideration and the transition should be completed by early March.

Typically, cities act as a conduit to facilitate bonding. Carson City will serve as the issuer of the bonds, but will not be liable for them.


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