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California Sells $177 Mln in Hospital Bonds

By Munichain News Desk

The California Health Facilities Financing Authority issued $177 million in bonds to finance upgrades at a children’s hospital in southern California.

The authority sold the bonds in two series. The Series 2024A bonds, consisting of $58.7 million, mature between 2042 and 2054, yielding between 3.2% and 3.69%. The Series 2024B bonds, consisting of $188.4 million, mature in 2054 and yield 2.67%. The securities received a rating of AA- from Fitch Ratings and AA- from S&P Global Ratings.

The authority will loan the bond proceeds to the Children’s Hospital of Orange County (CHOC). 

The rating reflects the hospital’s role “as the leading provider for pediatric acute care services in Orange County, a position that is solidified through its adult hospital and regional partnerships, ambulatory presence and pediatric trauma status,” FItch analysts wrote.

The bond proceeds will finance CHOC’s master plan, which includes more rooms for patients and their cars. The plan calls for a new ambulatory care tower and expanded parking.

Last year, CHOC agreed to merge with another southern California children’s hospital. If the merger with Rady Children’s Hospital and Health Center (RCHHC) goes through, CHOC will become part of RCHHC, which will become guarantor of CHOC’s debt. The deal is currently pending regulatory approval. 

The bonds are special, limited obligations of the California Health Facilities Financing Authority, payable by the loan to the Children’s Hospital of Orange County. 

Morgan Stanley & Co LLC served as underwriter on the issuance, purchasing the bonds for $201 million. The price reflected a premium of more than $24 million.

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