Here's another look at one reason why hospitals and health systems recently scrapped plans to refinance debt. Assets in mutual funds that buy long-term tax-exempt bonds plunged by $4.8 billion in the week ended Nov. 17, according to the most recent estimates from the Investment Company Institute.
That's a precipitous drop from the prior week, when the funds' assets declined $115 million, the trade group's figures show. Investors pulled back as borrowers rushed to market before the end of the year, a combination that helped to push interest rates higher and wipe out savings for those ready to refinance, including Aurora Health Care, MetroHealth System, and New Hanover Regional Medical Center.
The mid-November plunge in long-term mutual fund assets surpassed the drop reported during the bleak months of November and December 2008, when tax-exempt bond investors pulled $1.2 billion and $4.3 billion from funds, respectively. Declines to long-term tax-exempt funds totaled $8.4 billion in October 2008.
Funds recovered quickly from the volatility of late 2008, when financial markets nearly collapsed as the credit crisis erupted, and reported gains during the past 22 months.
Send us a letter
Have an opinion about this story? Click here to submit a Letter to the Editor, and we may publish it in print.