H2C CAPITAL MARKETS
December 21, 2020
On Thursday, December 3, Franciscan Missionaries of Our Lady Health System, headquartered in Baton Rouge, LA. (A2/A/NR) (“FMOLHS” or the “System”), priced $182,000,000 in 30-year taxable, fixed-rate bonds (“Series 2019B Bonds”). The proceeds of the bonds were used to refund the Series 2012B, Series 2005D, and Series 2008A bonds; fund swap termination payments; and finance general corporate expenditures. H2C acted as the exclusive financial advisor to FMOLHS on the transaction.
Pricing Summary
• $182,000,000 in 30-year taxable bonds due July 1, 2049; coupon of 3.914%, yield of 3.122% (+145 bps spread to 30-year UST).
Highlights
• The Series 2019B Bonds represent a reopening of the CUSIP for the original bonds that were issued in October 2019 with a par of $150,000,000. With the addition of the most recent issue, the Series 2019B Bonds now have a total par of $332,000,000 and are index eligible.
• The most recent issue accomplishes part two of a two-part plan of finance. Part one included the issuance of new money bonds in October 2019 to finance a variety of strategic projects throughout the System and refund two bank loans. Part two included the refunding and restructuring of several additional outstanding debt and swap issues that had originally not generated sufficient PV savings. With the decline in Treasury rates recently, PV savings increased and the System elected to proceed with the second part of the plan of finance. Part two of the plan of finance resulted in PV savings of $16.6 million, a decrease in MADS of $7.2 million, cash flow savings of $50.3 million over the next 20 years, and lower risk in the System’s capital structure.
• The spread of +145 bps is narrower than the +165 bps the System achieved in October 2019 and narrower than what other “A2” healthcare credits had been able to achieve in recent months. Lack of supply and excess funds held by institutional investors led to a favorable environment to issue bonds in early December. FMOLHS’ solid credit metrics and strong performance throughout the pandemic garnered significant interest from investors, leading to a large oversubscription of orders for the bonds and a notable improvement in credit spread from the original spread indication.
For more information, please contact Michael Hammond or Elaine Yao.
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ABOUT HAMMOND HANLON CAMP LLC (“H2C”)
H2C is an independent strategic advisory and investment banking firm committed to providing superior advice as a trusted advisor to healthcare organizations throughout the United States. H2C’s professionals have a long track record of success in healthcare mergers and acquisitions, capital markets, real estate, and restructuring transactions, acting as lead advisor on hundreds of transactions representing billions of dollars in value.
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