An improved bond rating will help Charleston Area Medical Center get a lower interest rate on the $300 million in bond debt it’s refinancing, its chief financial officer said Wednesday.
Moody’s Corporation recently upgraded the hospital’s bond rating from Baa1 with a negative outlook to a Baa1 with a stable outlook, CFO Jeff Sandene told the hospital’s board Wednesday morning during its regular meeting.
“It’s favorable from a financial standpoint to have a higher bond rating, and we will demand a lower interest rates on those overall bonds,” he said after the meeting. “So we don’t price those bonds until two weeks, so we don’t know the interest rates yet, but we know it will be more favorable.”
According to the financial services agency, the revision to stable “reflects our expectation that operating performance will remain relatively consistent with FYE 2018, liquidity and days cash on hand will improve incrementally from expected revenue cycle improvements.”
Moody’s scale goes from Aaa to C. A Baa rating means that obligations are “judged to be medium-grade and subject to moderate credit risk and as such may possess certain speculative characteristics,” according to the agency’s website.
The $300 million includes bonds the hospital used for several things, including building the heart and vascular center at CAMC Memorial and $16.5 million in bonds from the 2006 purchase of Putnam General Hospital, now called CAMC Teays Valley Hospital, Sandene said previously.
Also on Wednesday, the board voted to authorize refinancing $117 million in bonds issued in 2008 when CAMC bought Putnam General Hospital, Sandene said.
“So [the board action] gave us the authorization to execute the documents to improve the terms and conditions with BB&T,” Sandene said.