The Minnesota Agricultural and Economic Development Board issued $500 million in bonds to fund new hospitals near the Twin Cities.
The bonds mature between 2035 and 2054, yielding between 2.99% and 4.25%. They received a rating of A2 from Moody’s Investors Service and A from S&P Global Ratings.
The board will loan the bond proceeds to Group Health Plan, Inc, a nonprofit healthcare system which does business as HealthPartners.
The rating reflects “the continuation of HealthPartners’ strong market position with large and diverse operations which will drive consistent utilization and support cashflow growth,” Moody’s analysts wrote.
The bond proceeds will fund the construction of a replacement hospital in Stillwater, a city on the outskirts of St. Paul. They will also finance a replacement clinic in St. Paul, a new specialty care clinic in the St. Paul suburb of Woodbury, and improvements at Park Nicollet Methodist Hospital.
The relocation of Lakeview Hospital in Stillwater is expected to be the largest of the bond-funded projects, with an estimated cost between $400 and $500 million and a completion date in 2027. About $300 million of the project will be funded by bonds. The hospital’s new location next to a highway is expected to enable the hospital to expand and serve more patients, including by doubling its operating room capacity, according to the official statement accompanying the sale of the bonds.
HealthPartners operates eight hospitals and provides insurance to more than 1.2 million people across five states. The combination of insurance and health care are a strength for HealthPartners, according to Moody’s. “The system’s close integration of healthcare delivery with health plan offerings is a unique strategy in this region and creates revenue diversification and a differentiating value proposition,” they wrote.
The bonds are special, limited obligations of the board, payable by HealthPartners revenue.
Piper Sandler & Co and J.P. Morgan Securities LLC served as underwriters on the issuance, purchasing the bonds for $542 million. The price reflected a premium of $44 million and a discount of $2 million. Kaufman, Hall & Associates, LLC acted as financial advisor.