Standard & Poor’s Ratings Services assigned its ‘AA’ long-term rating to Providence Health & Services Obligated Group, Wash.’s (PH&S) $250 million series 2009 taxable direct obligation notes. In addition, Standard & Poor’s affirmed its ‘AA’ rating and underlying rating (SPUR) on PH&S’s outstanding debt from various issuers. Standard & Poor’s also affirmed its ‘A-1+’ rating on PH&S’s existing commercial paper (CP) program.
In our view, the rating reflects PH&S’s status as one of the nation’s largest not-for-profit health care providers with more than $7 billion in annual revenues demonstrating solid geographic and financial dispersion, and a strong business position in all of its major markets, strong, solid, and consistent operating profitability for many years and a capable management team.
The major offsetting factor is a balance sheet that in our view is only adequate for the rating, in part due to recent investment market losses, combined with the emergence of significant liabilities in the PH&S pension plan over the fifteen-month period ended Dec. 31, 2008.
The rating and stable outlook also reflects numerous actions by management to address the pension issue quickly, and move its investment allocation to a more conservative footing as part of its efforts to preserve and subsequently boost liquidity going forward.
“The stable outlook reflects PH&S’s record of consistent operating performance, a strong business position, and good operating cash flow,” said Standard & Poor’s credit analyst Martin Arrick. “The stable outlook also reflects our belief that any strategic growth will be consistent with management’s intent to maintain a financial profile consistent with the ‘AA’ category,” said Mr. Arrick.
There are plans for an additional $150 million issuance later this year; we expect the system to absorb the debt at the current rating level. If PH&S sustains its current operating performance and maintain liquidity, it will likely lead to an affirmation.
RELATED RESEARCH
— USPF Criteria: “Not-For-Profit Health Care,” June 14, 2007
— USPF Criteria: “Self Liquidity,” Oct. 16, 2006
Complete ratings information is available to RatingsDirect subscribers at www.ratingsdirect.com. All ratings affected by this rating action can be found on Standard & Poor’s public Web site at www.standardandpoors.com; select your preferred country or region, then Ratings in the left navigation bar, followed by Find a Rating.
Media Contact:
Ana Sandoval, New York (1) 212-438-5095, ana_sandoval@standardandpoors.com
Analyst Contacts:
Martin D Arrick, New York (1) 212-438-7963
Geraldine Poon, San Francisco (1) 415-371-5078
News Source :
Standard & Poor’s
REF : ThaiPR.net
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