Healthcare bonds making a comeback

Municipal hospital debt, once considered radioactive due to the financial uncertainties associated with the Affordable Care Act, is making a comeback, Reuters reported.

Hospital debt posted a return of 2.45 percent over the past six months, the second-highest among municipal market issues, according to the Barclays Capital Indexes, Bloomberg reported.

Partly as a result, large public providers such as the New York City Health and Hospitals Health Corporation was able to issue $110.3 million in bonds that received the fourth-highest rating, Aa3, from Moody's Investors Service. The system, which operates 11 hospitals, is responsible for 18 percent of the patient discharges in the nation's largest city, Bloomberg reported.

Overall, tax-free bond issues offered by cities and many public hospitals are offering good returns these days, Reuters noted.

The wire service said investors had previously backed away from hospital bonds due to uncertainties that the facilities would repay them after the Affordable Care Act was signed into law in 2010. However, fears that hospitals would default as the result of healthcare reform have since passed and demand perked up again last year, according to the article.

To learn more:
- read the Bloomberg article
- read the Reuters article

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