Henry Ford Health restructures systemwide debt in historic $1 billion transaction
Transaction is expected to cut more than $10 million in annual interest, lead to gains of $125 million in present value savings, system says.
Henry Ford Hospital-Detroit, MI(Wikipedia Image)
Henry Ford Health System made history this week when it successfully restructured all of its existing debt in a transaction that spawned $3.6 billion in bond orders and a final sale of $1 billion in bonds, the system announced Thursday.
Henry Ford Health called it the largest healthcare tax exempt bond issue in Michigan in the last quarter century, and possibly the largest in state history.
The transaction is expected to cut more than $10 million in annual interest, and the system expects to gain more than $125 million in present value savings. The bond issue refinanced Henry Ford's existing debt only, and involved no "new money" financing.
[Also: Michigan denies Henry Ford's health plan Medicaid contract in two major regions]
The interest rate on Henry Ford's new 30 year bonds is 3.7%, with an average total interest cost across all bonds of 3.5%.
Ed Chadwick, executive vice president and chief financial officer for Henry Ford Health System, says the bond issue has allowed Henry Ford to completely restructure all system debt, including the debt from its newest member, Henry Ford Allegiance Health.
"We are very pleased with the success of this bond transaction. After this bond issue almost all of our debt will be low cost fixed rate, which provides permanent interest savings, reduced liquidity risk and substantial flexibility for future financings. The substantial interest savings will allow us to continue to better serve our communities."
[Also: Michigan study latest to suggest Medicaid expansion led to fewer uninsured hospital stays]
Standard & Poor's recently upgraded Henry Ford's bond rating to 'A' with stable outlook, and Moody's maintained the system's 'A3' rating, upgrading the outlook from stable to positive. Both investors' groups cited sustained improvement in fiscal operations from 2015 into 2016, deals finalized with Allegiance Health in Jackson, MI, and a merger between HealthPlus in Flint and Henry Ford.
Henry Ford Health System is a six-hospital system headquartered in Detroit, Michigan that provides both health insurance and health care delivery, including acute, specialty, primary and preventive care services.
Twitter: @BethJSanborn
