December 18, 2019
Hartford HealthCare tees up massive $750M bond package
By Matt Pilon
Hartford HealthCare is planning a $750-million bond issuance -- intended mainly to refinance older debt at lower interest rates but to also invest in its operations -- that would be the largest ever debt package of its kind in the state.
The board of the Connecticut Health and Educational Facilities Autorhity (CHEFA), a quasi-public agency that issues tax-exempt bonds and certain taxable debt on behalf of healthcare and educational facilities in the state, is slated to vote on the Hartford HealthCare debt package during a 1:30 p.m. meeting on Wednesday.
The deal would surpass CHEFA’s prior largest deal -- a $543-million bond issue for Yale New Haven Health in 2014, CHEFA managing director Michael Morris confirmed to HBJ.
The quasi-public agency has completed approximately 700 bond issuances since 1965, totaling $22 billion.
Hartford HealthCare said its current expectation is to issue $440 million in tax-exempt debt and $310 million in taxable debt.
The health system would use the bulk of the proceeds to refund outstanding debt, as well as to refinance several loans, including those that financed its recent acquisition of St. Vincent’s Medical Center in Bridgeport.
Richard Stys, treasurer and senior vice president of finance, said Hartford HealthCare expects its cost of capital to fall from just under 4 percent to about 3.6 percent as a result of the pending issue.
Approximately $50 million would be used for IT projects and ambulatory network buildout in Fairfield County, where Hartford HealthCare is a relative newcomer.
The health system is aiming to price the bonds and close the deal in January.
Editor's note: This story has been updated to reflect updated borrowing estimates provided to HBJ by Hartford HealthCare. The health system anticipates a total issuance of $750 million, which is $80 million higher than the figure originally included in this story, which was provided by CHEFA.