CHICAGO -- Moody's Investors Service last week upgraded the bond rating for Order of St. Francis Healthcare System in Peoria, Ill., to Al from A, citing the system's favorable financial performance and manageable debt position.
The rating action was taken in conjunction with the system's anticipated sale next week of $122.7 million of revenue bonds to advance refund 1986 bonds and to provide $60 million for future capital needs, according to Christine Ballantyne, an assistant vice president at Moody's. The refunding will provide about $60 million for future capital needs.
Ballantyne said that the system, which has six hospitals in Illinois and one in Michigan, is "very stable" financially. The system's "well-developed" centralized management has contributed to its favorable operating performance, the rating agency said in a press release.
The system's debt service coverage is favorable and will continue to be manageable after the revenue bonds are issued, the rating agency said. Significant variable-rate debt exposure will be reduced after the anticipated bond issue, but will continue to be above average at 55% of total debt, Moody's said.
Ballantyne said that the hospital system has a "fair amount" of liquid assets totaling $133 million, which equals 123 days of cash on hand. An additional $60 million from the anticipated bond issue will add to the system's liquidity position, she said.
Though most of its hospitals are profitable, Ballantyne said the system may be vulnerable because it relies on a substantial portion of revenues from its flagship hospital in Peoria. The city's economy depends in large part on Caterpillar Tractor Inc., its dominant employer.