FL hospital trades out pricey bonds for fixed-rate debt

St. Petersburg, FL-based All Children's Hospital has set plans to replace $60 million in auction rate bonds issued in 2007 with fixed-rate tax-exempt bonds. While this may not sound like much, the deal is actually a sign that the decimated bond market may be stabilizing after at least a year of utter turmoil.

Hospitals have taken a bath on auction-rate bonds over the past 12 months, with interest rates soaring as the insurers who back those bonds up have weakened. Getting out of the bonds has been the priority of many a hospital, which have suffered as interest rates rose into the double-digits in some cases. All Children's is no exception; starting a year ago, the facility has had to begin buying back its own bonds to reduce the cost of borrowing.

In getting the deal done, it definitely helps that Fitch Ratings has assigned a AA rating to the City of St. Petersburg Health Facilities Authority refunding bonds, which are being issued with All Children's as the obligated group. Fitch, meanwhile, has also affirmed the AA rating on $163 million in other outstanding bonds, which have financed construction of a 240-bed replacement hospital on track for completion later this year.

To learn more about the refinancing:
- read this Tampa Bay Business Journal article

Related Articles:
Case study: NJ hospital refinances bond debt
Auction-rate bond crisis bodes ill for non-profit providers