The bond ratings assigned to one of the premier children's hospitals in the United States have stabilized recently, reflecting reductions in the hospital's operating losses.
Standard & Poor's Ratings Services has upgraded the outlook on the long term and underlying ratings on private placement revenue bonds issued for Children's Hospital Los Angeles. The ratings firm affirmed its BBB+ rating on the hospital's bonds and certificates of participation.
S&P says the outlook on the facility's underlying rating is no longer negative, but stable.
CHLA, a 286-bed facility, is a specialty pediatric hospital in southern California. The hospital has what S&P categorizes as a "very challenging payer mix" that has historically relied on significant fundraising.
The California Statewide Communities Development Authority issued series 2007 fixed-rate private placement revenue bonds, series 2004A and B auction-rate bonds, and series 1999 COPs for CHLA. A gross revenue pledge and a mortgage from CHLA secure the bonds.
Standard & Poor's also assigned its 'BBB+' long-term rating to the authority's $141.2 million series 2010 fixed-rate revenue bonds issued for CHLA.
Standard & Poor's credit analyst Suzie Desai said the outlook revision reflects the fact that CHLA has secured most of its funding sources for a new patient tower project. The hospital has completed approximately 90 percent of the construction project.
Desai also credited CHLA's ongoing reduction in operating losses.
"We understand that approximately $122 million in proceeds of the series 2010 fixed-rate bonds will go toward refinancing the series 2004A and B auction rate securities and the series 2008A and C variable-rate demand bonds," Desai said.
She noted that CHLA plans to use the remainder of the proceeds to fund a debt service reserve fund and to pay issuance fees.