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South Dakota Issues $339 Million in Health-Care Bonds

By Munichain News Desk

The South Dakota Health and Education Facilities Authority sold $339 million in bonds to finance upgrades for a regional health system based in Sioux Falls.

The bonds mature between 2028 and 2054, yielding between 2.96% and 4.46%. They received a rating of AA- from Fitch Ratings and AA- from S&P Global Ratings.

The authority will loan the bond proceeds to Avera Health, a regional health care provider operating in South Dakota, Iowa, Minnesota, Nebraska, and North Dakota.

The rating reflects “Avera’s strong operating risk and financial profile assessments, and significant size and scale in the Sioux Falls, SD market and in the four other states in which its facilities are located,” Fitch analysts wrote.

Avera Health will use the bond proceeds to finance the construction of a new women’s and children’s center and refund securities issued in 2014 and 2019. The project will form the largest expansion of hospital patient care space in Sioux Falls history, according to Avera Health’s website.

The health system will also use the bond funding to build a 127,000 square foot medical office building. The system estimates that the two projects will cost a total of $245 million with construction done by January 2027. 

The bonds are limited obligations of the authority, payable by Avera Health revenue.

BofA Securities, Inc served as lead underwriter on the issuance, purchasing the bonds for $365 million. The price reflected a premium of $27.3 million and a discount of $1.3 million. Kaufman, Hall & Associates, LLC acted as financial advisor.

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