FOR IMMEDIATE RELEASE
June 13, 2002
MOODY'S ASSIGNS A3 RATING TO
NEW HHC BOND SERIES TOTALING $600 MILLION
Moody's Investor Services announced today that it is assigning an A3 rating to approximately $600 million of Series 2002 bonds to be issued by New York City Health and Hospitals Corporation (HHC). Moody's attributes their rating to New York City's ongoing support of HHC, the strength of HHC's lock-box security structure and HHC's positive credit position.
HHC anticipates issuing approximately $300 million as tax-exempt new money bonds, as well as another $300 million in bonds to refinance HHC's Series 1997 bonds, which are being insured by Finance Security Assurance Inc. (FSA). Bond proceeds will be used to finance ongoing capital needs, including building infrastructure, enhancing information systems, equipment, and an ambitious $1.1 billion capital improvement plan to modernize New York City's public hospitals.
HHC's rating continues to be tied to the credit risk of New York City, because of the City's reliance on the public benefit corporation to provide vital health care services for approximately 1.3 million New Yorkers, including 545,000 uninsured patients. Moody's rates HHC at one level below the City, whose A2 rating is based on well established budgetary controls and an economic base that is fundamentally strong, despite the current recession and the disruption caused by the events of September 11th.
Moody's noted that HHC's current security structure provides bondholders with additional value, since HHC's revenue from third-party payers is deposited daily through a lock-box mechanism, which insures that bond principal and interest payments are paid before money is allocated for operating expenses.
HHC has impressed the investor community in recent years by strengthening its fiscal health and reversing many years of negative financial trends. HHC's newly appointed President, Dr. Benjamin Chu is focusing on generating revenue growth by improving clinical services, upgrading physical plant and expanding enrollment of uninsured patients in Child Health Plus, Family Health Plus and Medicaid.
In recent years, HHC hospitals have been repeatedly recognized for providing outstanding patient care, receiving accreditation scores averaging 94 from the Joint Commission on Accreditation of Healthcare Organizations (JCAHO), exceeding the national average of 91. Most recently, in May 2002, Queens Hospital received a preliminary JCAHO score of 96.
Serving the five boroughs of New York City, HHC is the largest municipal health system in the U.S., with an annual budget of $4.1 billion. The public benefit corporation operates 11 acute care teaching hospitals, four long term care facilities, six diagnostic and treatment centers, a certified home health agency, and more than 100 community health clinics.