The Massachusetts Development Finance Agency issued $150 million in bonds to finance the construction of a new hospital building for one of the largest healthcare systems in the United States.
The agency sold the bonds in two series, each consisting of $75 million and maturing on July 1, 2052. They pay interest at a daily rate. Moody’s Investors Service assigned a long-term rating of Aa3 to the first series and Aa1 to the second series. S&P Global Ratings assigned a long-term rating of AA- to the first series and AAA to the second.
The agency will loan the bond proceeds to Mass General Brigham, one of the largest U.S. hospital systems.
The ratings reflect Mass General Brigham’s “reputations for clinical services and research at its namesake academic medical center flagships that drive excellent patient demand and help it maintain a strong market position,” Moody’s analysts wrote.
In recent decades, the hospital system has become known for large-scale mergers. Its current formation stems from the merger of rivals Massachusetts General Hospital and Brigham and Women’s Hospital in 1994. But that consolidation has increasingly drawn attention from regulators.
“Regulatory scrutiny will continue to limit acquisitions and construction of new facilities, though investments in related healthcare businesses will provide a pathway to diversify cash flow,” according to Moody’s.
The bond proceeds will fund the construction of a hospital building on Cambridge Street in downtown Boston. They will also finance a 78-bed addition to an existing facility.
Mass General Brigham recorded $18 billion in revenue in 2022. The bonds are special obligations of the Massachusetts Development Finance Agency, payable by certain Mass General Brigham revenue.
J.P. Morgan Securities LLC and RBC Capital Markets, LLC served as underwriters on the issuance. PFM Financial Advisors LLC acted as financial advisor.