Separately, hospital borrowers with outstanding debt guaranteed by the Federal Housing Administration Hospital Mortgage Insurance program should not be affected by the U.S. government debt downgrade, said Scott Moore, a managing director with Red Mortgage Capital. That's because interest rates are locked in as deals close, he said. Borrowing costs won't increase so hospitals should not see any risk of violating debt covenants tied to financial performance, Moore said.
Standard & Poor’s told investors its downgrade of U.S. debt did not affect ratings for a half-dozen highly rated non-financial corporate borrowers as markets plunged today, including Automatic Data Processing, a Roseland, N.J.-based human resources outsourcing firm. But the agency’s assessment of the healthcare sector was bleaker.
Analysts consider attempts to control Medicare costs “a key rating risk” and cuts are expected under last week’s debt ceiling compromised between Congress and the White House, Standard & Poor’s said. “Providers that have exposure to Medicare are likely to remain at risk of more sparing reimbursement, as long as budgetary pressures persist,” the ratings agency said.
Meanwhile, the Dow Jones Industrial Average closed 634 points lower on Monday, the largest drop since Dec. 1, 2008.