The University of Kansas Hospital Authority is raising $253.5 million for a new hospital campus as some signs of life have begun to return to the hospital bond market. The authority joins a small group of hospitals that are raising funds for major new construction projects this year.
The 623-bed hospital in Kansas City, Kan., is spending nearly $280 million to construct an expansion hospital known as Cambridge North on land located north of the main campus. The bonds will cover $150 million of the project's cost, while the remainder will be funded by philanthropy, cash from operations and other available funds.
The fixed-rate bonds are slated to be issued next week, when they're also expected to price. The hospital will use the remaining proceeds to pay off bonds that were issued in 2006.
Fitch Ratings and Standard & Poor's each assigned an A+ credit rating to the 2015 bonds.
Hospital borrowing reached its lowest level in more than a decade last year. Most new issuances this year have been for refunding purposes as systems seek to take advantage of low interest rates to refinance older debt.
Spending on large-scale capital projects has waned in recent years as hospitals focus on smaller information-technology projects that can be funded with bank loans, rather than long-term bond issuances.
Still, some markets are continuing to see building projects.
The University of Kansas Hospital joins Trinity Health in Livonia, Mich., and Memorial Sloan-Kettering Cancer Center in New York in financing large-scale construction projects this year.
In addition, Vidant Health in Greenville, N.C., earlier this month filed an offering document to raise $286.8 million to fund part of the construction of a 418,000 square-foot, six-story cancer center. The tower will add 96 inpatient beds as well as outpatient facilities. The bonds will pay for $130 million of the estimated $170.8 million project.
The bonds were expected to be sold this week and will mature in 2045. Moody's Investors Service assigned an A1 rating to the bonds while S&P rated them A+. Pricing information was not available.
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