The Massachusetts Development Finance Agency issued $150 million in federally taxable bonds to finance upgrades at Tufts Medical Center (TMC).
The bonds mature in October 2026 and pay interest at 8.5%. They received a rating of BBB- from Fitch Ratings and from S&P Global Ratings.
The agency will lend the proceeds to TMC, which will use them to repay a loan from JP Morgan Chase Bank, NA and finance capital projects.
The issuance follows TMC’s selection in January of a new CFO, Andrew DeVoe, after two years of losses. The Tufts Medicine obligated group recorded a loss of $313 million in fiscal year 2022 and $35.7 million in FY 2023, according to the official statement accompanying the sale of the bonds.
“Tufts Medicine incurred significant costs for supplies, equipment and facility modifications and labor expended due to COVID-19 surges,” according to the bond documents.
Fitch analysts credited DeVoe with accelerating a turnaround plan that aims to create a positive operating margin by the end of next year. They wrote that their rating reflects “material traction” that TMC has achieved on the turnaround under his tenure, which began in February. Monthly contract labor costs have dropped 35% since then, according to Fitch.
The bonds are special obligations of the Massachusetts Development Finance Agency, secured by loan repayments from Home Care, Inc, the obligated group behind TMC.
J.P. Morgan Securities LLC served as underwriter on the issuance.