The system is expected to raise $580 million from the issues. Moody's rated the new and existing debt as Aa3 but with a stable outlook, pointing to an operating loss in Partners' insurance unit, anticipated weaker performance and plans for increased capital spending. Previously, existing debt had been rated Aa2.
Neighborhood Health Plan, the insurance arm Partners acquired in 2012, suffered a $110 million loss in 2014 that helped drag the system's fiscal year operating margin into the red. The loss was also one of the reasons Fitch Ratings highlighted in its assignment of AA ratings to Partners' upcoming bond issues. Fitch's outlook for Partners is also listed as stable.
Standard & Poor's wasn't as optimistic about the system's outlook, despite also assigning an AA rating to the system's $580 million in bonds. “The negative outlook reflects our view of Partners' weakened operating performance in fiscal 2014 and uncertainty about recovery through the two-year outlook period,” S&P analysts said in a news release. But S&P did mention “Partners' excellent enterprise profile and balance sheet strengths” as mitigating factors, which Moody's and Fitch alluded to as well.