info

Yes No
Moodys.com
Terms of Use
REGULATORY AFFAIRS
CAREERS
ABOUT US
CONTACT US
HOME
Close
Please Note
We brought you to this page based on your search query. If this isn't what you are looking for, you can continue to Search Results for ""
The maximum number of items you can export is 3,000. Please reduce your list by using the filtering tool to the left.
Close
Close
Email Research
Recipient email addresses will not be used in mailing lists or redistributed.
Recipient's
Email

Use semicolon to separate each address, limit to 20 addresses.
Enter the
characters you see
Can't read?
Try a new set
Send Cancel
Close
Email Research
Thank you for your interest in sharing Moody's Research. You have reached the daily limit of Research email sharings.
OK
Close
Thank you!
You have successfully sent the research.
Please note: some research requires a paid subscription in order to access.
OK
Already a customer?
LOG IN
Don't want to see this again?
REGISTER
OR
Accept our Terms of Use to continue to Moodys.com:

PLEASE READ AND SCROLL DOWN!

By clicking “I AGREE” [at the end of this document], you indicate that you understand and intend these terms and conditions to be the legal equivalent of a signed, written contract and equally binding, and that you accept such terms and conditions as a condition of viewing any and all Moody’s inform​ation that becomes accessible to you [after clicking “I AGREE”] (the “Information”).   References herein to “Moody’s” include Moody’s Corporation, Inc. and each of its subsidiaries and affiliates.

Terms of One-Time Website Use

1.            Unless you have entered into an express written contract with Moody’s to the contrary, you agree that you have no right to use the Information in a commercial or public setting and no right to copy it, save it, print it, sell it, or publish or distribute any portion of it in any form.               

2.            You acknowledge and agree that Moody’s credit ratings: (i) are current opinions of the future relative creditworthiness of securities and address no other risk; and (ii) are not statements of current or historical fact or recommendations to purchase, hold or sell particular securities.  Moody’s credit ratings and publications are not intended for retail investors, and it would be reckless and inappropriate for retail investors to use Moody’s credit ratings and publications when making an investment decision.  No warranty, express or implied, as the accuracy, timeliness, completeness, merchantability or fitness for any particular purpose of any Moody’s credit rating is given or made by Moody’s in any form whatsoever.          

3.            To the extent permitted by law, Moody’s and its directors, officers, employees, representatives, licensors and suppliers disclaim liability for: (i) any indirect, special, consequential, or incidental losses or damages whatsoever arising from or in connection with use of the Information; and (ii) any direct or compensatory damages caused to any person or entity, including but not limited to by any negligence (but excluding fraud or any other type of liability that by law cannot be excluded) on the part of Moody’s or any of its directors, officers, employees, agents, representatives, licensors or suppliers, arising from or in connection with use of the Information.

4.            You agree to read [and be bound by] the more detailed disclosures regarding Moody’s ratings and the limitations of Moody’s liability included in the Information.     

5.            You agree that any disputes relating to this agreement or your use of the Information, whether sounding in contract, tort, statute or otherwise, shall be governed by the laws of the State of New York and shall be subject to the exclusive jurisdiction of the courts of the State of New York located in the City and County of New York, Borough of Manhattan.​​​

I AGREE
Rating Action:

Moody's upgrades Catholic Health East's to Aa2; outlook is negative

03 Oct 2013

$687 million of rated debt affected

New York, October 03, 2013 -- Moody's Investors Services has upgraded to Aa2 from A2 the ratings assigned to Catholic Health East's (CHE) $687 million of outstanding long-term rated debt issued through various authorities. The outlook is negative. CHE is now part of CHE Trinity, Inc. (referred to as CHE Trinity) and the rating upgrade and negative outlook are based on our analysis of CHE Trinity. The rating upgrade is attributable to a proposed substitution of notes that is scheduled to take place the week of October 1, 2013. At this time we are assigning Aa2/VMIG 1 ratings to the previously issued Series 2012B bonds issued through the Saint Mary Hospital Authority and the Series 2008 bonds issued through the North Carolina Medical Care Commission. These bonds are expected to be remarketed at the time that CHE Trinity issues its 2013 bonds. The long-term and short-term ratings are based on the credit quality of CHE Trinity, CHE Trinity's self liquidity program established originally by Trinity Health, and the proposed new debt security structure. Please see the CHE Trinity and Trinity Health reports issued concurrent with this report for a discussion of the analysis supporting the short term rating.

CHE Trinity became the new sole corporate member of Catholic Health East (CHE) and Trinity Health on May 1, 2013. CHE and Trinity Health currently maintain separate obligated groups in support of their respective organization's secured debt. As part of the merger, a new debt structure is being established whereby Trinity Health's Master Trust Indenture (MTI) will be amended to expand the Obligated Group to include CHE Trinity, CHE and Trinity Health. Trinity Health's debt will continue to be secured under the amended MTI and CHE's debt that is not refunded or refinanced will become secured under the new MTI through a proposed substitution of notes for the existing outstanding bonds, scheduled to occur on October 2, 2013. CHE Trinity is issuing $305 million of Series 2013 bonds. Concurrent with this bond sale, CHE's debt is being upgraded to Aa2 from A2 to reflect the new security and Trinity Health's bond ratings are being affirmed (see separate rating reports issued concurrently for CHE Trinity and Trinity Health).

Should the proposed substitution of notes not take place as outlined, CHE's rating will be revisited and could be downgraded.

SUMMARY RATING RATIONALE:

The Aa2 rating is attributable to CHE Trinity's position as one of the nation's largest multi-state health systems that has expanded into 21 states, with anticipated operating revenues to be just shy of $14 billion in fiscal year (FY) 2014 following the May 1, 2013 consolidation of Trinity Health and CHE. This geographic diversification generates cash flow diversification, with only three ministry organizations generating greater than 10% of system operating cash flow, and reducing the exposure to unfavorable fluctuations in any one state to only 25% of system revenues. Trinity Health's margins softened at the end of the last decade but have remained stable at 9.6% for the past three years (FY 2013 excludes net rural floor settlement of $50 million). While CHE experienced operational improvement in FY 2012 (ended December 31), the operating cash flow margin of 7.8% remains below that of Trinity Health (excludes net rural floor settlement of $24 million). On a pro forma basis as of June 30, 2013 including Trinity Health's audited financial performance and twelve months of CHE ended June 30, 2013, the combined group shows a adequate pro forma 9.0% operating cash flow margin and good debt service coverage of over 5 times on a moderate debt load. Cash on hand is adequate at just over 200 days, yet cash to direct debt is well below average for a Aa at 137% (Aa2 median is 222%).

The negative outlook speaks to the absence of a permanent top executive management team at this time, the weakened combined pro forma performance prior to the realization of annualized $302 million of cost control improvements and $100 million of anticipated revenue enhancements over the next three years, and the potential for the addition of organizations with weaker credit profiles that will place pressure on the rating.

STRENGTHS

*CHE Trinity has material geographic diversification across 21 states that reduces risk to any healthcare changes in an individual state. Only three markets comprise greater than 10% individually of system operating cash flow in FY 2013 (Columbus, OH, Ann Arbor, MI, and Chicago, IL), yet these regional systems hold strong market positions.

* CHE Trinity is now the second largest system in our portfolio with operating revenues projected to near $14 billion in FY 2014. Trinity Health, the stronger of the two combining systems, represents about 67% of the newly formed system's revenues and brings a history of strong centralized services.

*The organizations undertook separate cultural surveys prior to the merger that evidenced two highly aligned corporate cultures. A lack of geographic overlap will help mitigate conflicts of clinical integration on a market-by-market basis that can sometimes impair mergers over the short term. Concomitantly, however, it limits large scale clinical cost avoidance savings.

*Trinity Health has experienced a stable operating cash flow margin across the past three years (June yearend) and CHE reported improved performance in FY 2012 (December yearend). The combined operating performance is below average for a Aa2 rating (pro forma 9.0% operating cash flow margin for FY 2013), but remains good compared to peers with comparably large revenues bases. Operational improvement is anticipated across the next three years with annualized $302 million targeted in cost controls as the system's functions are consolidated and $100 million of anticipated revenue enhancements.

*Pro forma Moody's adjusted maximum annual debt service (MADS) coverage remains good at over 5 times on an average debt load of 37% debt to revenues.

*Growth in absolute liquidity has maintained cash on hand at or above 200 days with a strong treasury management function. CHE's assets have been consolidated with Trinity Health's treasury function and an anticipated rebalancing of the portfolio will occur over the next six months.

*Both organizations maintain a history of strategic mergers/acquisitions and divestitures to improve system operating performance. Trinity Health demonstrated a highly successful turnaround at Loyola University Health System in Chicago. CHE has pending divestitures of unprofitable markets that are expected to close in the near term.

*A sizable unrestricted liquidity portfolio along with a dedicated syndicated line of credit, solid treasury management, and appropriate liquidation procedures support the tender features on variable rate demand debt supported by internal liquidity.

CHALLENGES

*CHE Trinity is without a permanent top executive management team, currently functioning with an interim chief executive officer (the CEO from CHE), an interim COO from the Trinity Health Board, and an interim chief financial officer (the CFO from CHE). The longstanding CEO of Trinity Health was slated to be the CEO of CHE Trinity, but an unexpected departure from the organization mandated a change in plans. A new CEO is expected by the end of the calendar year.

*Trinity Health experienced slow decline of the operating cash flow margin in the last decade, followed by stability at a lower level in 2011-2013. The operating performance and balance sheet profile of Aa2 rated Trinity Health Credit Group was further weakened with the merger of CHE. CHE Trinity has signed a letter of intent with Ba1 rated St. Joseph's Hospital Health Center in NY, whose projected $600 million in revenues could cause additional pressure on ratios.

*CHE Trinity expects to issue debt annually to fund capital projects and strategic growth, though management has proven an ability and willingness to pull back on capital spending when either operations or liquidity are stressed.

*Current liquidity is strained relative to the Aa2 level with ratios below the Aa2 median: pro forma cash on hand of 201 days versus median of 290 days and pro forma cash to direct debt low at 137% versus median of 222%. Additionally, CHE Trinity has underfunded pension plans and a sizable swap program.

*Many of the system's hospitals operate in highly competitive markets, with some not holding leading market share positions.

*Protracted efforts to complete various planned divestitures of CHE underperforming assets is a credit risk and continued consumption of time and resources.

OUTLOOK

The negative outlook reflects the absence of a permanent senior leadership team, a lengthy effort to complete the divestiture of some distressed CHE facilities, recent tempering of pro forma operating performance and balance sheet metrics, and potential future acquisitions that could stymie near-term improvement.

WHAT COULD MOVE THE RATNG UP

A rating upgrade would be considered with material and sustained improvement in operating and operating cash flow margins that generate improved debt coverage metrics on a sustained basis. Establishment of a permanent top executive team is a must. Growth in liquidity and an overall strengthening of the balance sheet, including higher coverage under the self-liquidity program would need to be reached. Successful integration of the two merged organizations with a track record at higher performance levels would be an additional factor.

WHAT COULD MOVE THE RATING DOWN

A rating downgrade would be considered if CHE Trinity is unable to improve operating performance due to challenges with the integration of the two systems or acquisitions/ mergers that further dilute operations or the balance sheet. Continued protracted effort to divest of two distressed CHE markets will also pressure the rating. The inability to establish a permanent and effective new executive management team for this complex organization will create rating pressure. Any tempering of the balance sheet, in particular a weakening of liquidity balances, could place stress on the long term rating.

The principal methodology used in the long term rating was Not-for-Profit Healthcare Rating Methodology published in March 2012. An additional methodology used in rating the short term rating was Variable Rate Instruments Supported by Conditional Liquidity Facilities published in May 2013. Please see the Credit Policy page on www.moodys.com for a copy of these methodologies.

REGULATORY DISCLOSURES

For ratings issued on a program, series or category/class of debt, this announcement provides certain regulatory disclosures in relation to each rating of a subsequently issued bond or note of the same series or category/class of debt or pursuant to a program for which the ratings are derived exclusively from existing ratings in accordance with Moody's rating practices. For ratings issued on a support provider, this announcement provides certain regulatory disclosures in relation to the rating action on the support provider and in relation to each particular rating action for securities that derive their credit ratings from the support provider's credit rating. For provisional ratings, this announcement provides certain regulatory disclosures in relation to the provisional rating assigned, and in relation to a definitive rating that may be assigned subsequent to the final issuance of the debt, in each case where the transaction structure and terms have not changed prior to the assignment of the definitive rating in a manner that would have affected the rating. For further information please see the ratings tab on the issuer/entity page for the respective issuer on www.moodys.com.

Regulatory disclosures contained in this press release apply to the credit rating and, if applicable, the related rating outlook or rating review.

Please see www.moodys.com for any updates on changes to the lead rating analyst and to the Moody's legal entity that has issued the rating.

Please see the ratings tab on the issuer/entity page on www.moodys.com for additional regulatory disclosures for each credit rating.

Kay M Sifferman
VP - Senior Credit Officer
Public Finance Group
Moody's Investors Service, Inc.
600 North Pearl Street
Suite 2165
Dallas, TX 75201
U.S.A.
JOURNALISTS: 212-553-0376
SUBSCRIBERS: 212-553-1653

Beth I. Wexler
VP - Senior Credit Officer
Public Finance Group
JOURNALISTS: 212-553-0376
SUBSCRIBERS: 212-553-1653

Releasing Office:
Moody's Investors Service, Inc.
250 Greenwich Street
New York, NY 10007
U.S.A.
JOURNALISTS: 212-553-0376
SUBSCRIBERS: 212-553-1653

Moody's upgrades Catholic Health East's to Aa2; outlook is negative
No Related Data.
© 2019 Moody’s Corporation, Moody’s Investors Service, Inc., Moody’s Analytics, Inc. and/or their licensors and affiliates (collectively, “MOODY’S”). All rights reserved.

CREDIT RATINGS ISSUED BY MOODY'S INVESTORS SERVICE, INC. AND ITS RATINGS AFFILIATES (“MIS”) ARE MOODY’S CURRENT OPINIONS OF THE RELATIVE FUTURE CREDIT RISK OF ENTITIES, CREDIT COMMITMENTS, OR DEBT OR DEBT-LIKE SECURITIES, AND MOODY’S PUBLICATIONS MAY INCLUDE MOODY’S CURRENT OPINIONS OF THE RELATIVE FUTURE CREDIT RISK OF ENTITIES, CREDIT COMMITMENTS, OR DEBT OR DEBT-LIKE SECURITIES. MOODY’S DEFINES CREDIT RISK AS THE RISK THAT AN ENTITY MAY NOT MEET ITS CONTRACTUAL FINANCIAL OBLIGATIONS AS THEY COME DUE AND ANY ESTIMATED FINANCIAL LOSS IN THE EVENT OF DEFAULT OR IMPAIRMENT. SEE MOODY’S RATING SYMBOLS AND DEFINITIONS PUBLICATION FOR INFORMATION ON THE TYPES OF CONTRACTUAL FINANCIAL OBLIGATIONS ADDRESSED BY MOODY’S RATINGS. CREDIT RATINGS DO NOT ADDRESS ANY OTHER RISK, INCLUDING BUT NOT LIMITED TO: LIQUIDITY RISK, MARKET VALUE RISK, OR PRICE VOLATILITY. CREDIT RATINGS AND MOODY’S OPINIONS INCLUDED IN MOODY’S PUBLICATIONS ARE NOT STATEMENTS OF CURRENT OR HISTORICAL FACT. MOODY’S PUBLICATIONS MAY ALSO INCLUDE QUANTITATIVE MODEL-BASED ESTIMATES OF CREDIT RISK AND RELATED OPINIONS OR COMMENTARY PUBLISHED BY MOODY’S ANALYTICS, INC. CREDIT RATINGS AND MOODY’S PUBLICATIONS DO NOT CONSTITUTE OR PROVIDE INVESTMENT OR FINANCIAL ADVICE, AND CREDIT RATINGS AND MOODY’S PUBLICATIONS ARE NOT AND DO NOT PROVIDE RECOMMENDATIONS TO PURCHASE, SELL, OR HOLD PARTICULAR SECURITIES. NEITHER CREDIT RATINGS NOR MOODY’S PUBLICATIONS COMMENT ON THE SUITABILITY OF AN INVESTMENT FOR ANY PARTICULAR INVESTOR. MOODY’S ISSUES ITS CREDIT RATINGS AND PUBLISHES MOODY’S PUBLICATIONS WITH THE EXPECTATION AND UNDERSTANDING THAT EACH INVESTOR WILL, WITH DUE CARE, MAKE ITS OWN STUDY AND EVALUATION OF EACH SECURITY THAT IS UNDER CONSIDERATION FOR PURCHASE, HOLDING, OR SALE.

MOODY’S CREDIT RATINGS AND MOODY’S PUBLICATIONS ARE NOT INTENDED FOR USE BY RETAIL INVESTORS AND IT WOULD BE RECKLESS AND INAPPROPRIATE FOR RETAIL INVESTORS TO USE MOODY’S CREDIT RATINGS OR MOODY’S PUBLICATIONS WHEN MAKING AN INVESTMENT DECISION. IF IN DOUBT YOU SHOULD CONTACT YOUR FINANCIAL OR OTHER PROFESSIONAL ADVISER.

ALL INFORMATION CONTAINED HEREIN IS PROTECTED BY LAW, INCLUDING BUT NOT LIMITED TO, COPYRIGHT LAW, AND NONE OF SUCH INFORMATION MAY BE COPIED OR OTHERWISE REPRODUCED, REPACKAGED, FURTHER TRANSMITTED, TRANSFERRED, DISSEMINATED, REDISTRIBUTED OR RESOLD, OR STORED FOR SUBSEQUENT USE FOR ANY SUCH PURPOSE, IN WHOLE OR IN PART, IN ANY FORM OR MANNER OR BY ANY MEANS WHATSOEVER, BY ANY PERSON WITHOUT MOODY’S PRIOR WRITTEN CONSENT.

CREDIT RATINGS AND MOODY’S PUBLICATIONS ARE NOT INTENDED FOR USE BY ANY PERSON AS A BENCHMARK AS THAT TERM IS DEFINED FOR REGULATORY PURPOSES AND MUST NOT BE USED IN ANY WAY THAT COULD RESULT IN THEM BEING CONSIDERED A BENCHMARK.

All information contained herein is obtained by MOODY’S from sources believed by it to be accurate and reliable. Because of the possibility of human or mechanical error as well as other factors, however, all information contained herein is provided “AS IS” without warranty of any kind. MOODY'S adopts all necessary measures so that the information it uses in assigning a credit rating is of sufficient quality and from sources MOODY'S considers to be reliable including, when appropriate, independent third-party sources. However, MOODY’S is not an auditor and cannot in every instance independently verify or validate information received in the rating process or in preparing the Moody’s publications.

To the extent permitted by law, MOODY’S and its directors, officers, employees, agents, representatives, licensors and suppliers disclaim liability to any person or entity for any indirect, special, consequential, or incidental losses or damages whatsoever arising from or in connection with the information contained herein or the use of or inability to use any such information, even if MOODY’S or any of its directors, officers, employees, agents, representatives, licensors or suppliers is advised in advance of the possibility of such losses or damages, including but not limited to: (a) any loss of present or prospective profits or (b) any loss or damage arising where the relevant financial instrument is not the subject of a particular credit rating assigned by MOODY’S.

To the extent permitted by law, MOODY’S and its directors, officers, employees, agents, representatives, licensors and suppliers disclaim liability for any direct or compensatory losses or damages caused to any person or entity, including but not limited to by any negligence (but excluding fraud, willful misconduct or any other type of liability that, for the avoidance of doubt, by law cannot be excluded) on the part of, or any contingency within or beyond the control of, MOODY’S or any of its directors, officers, employees, agents, representatives, licensors or suppliers, arising from or in connection with the information contained herein or the use of or inability to use any such information.

NO WARRANTY, EXPRESS OR IMPLIED, AS TO THE ACCURACY, TIMELINESS, COMPLETENESS, MERCHANTABILITY OR FITNESS FOR ANY PARTICULAR PURPOSE OF ANY CREDIT RATING OR OTHER OPINION OR INFORMATION IS GIVEN OR MADE BY MOODY’S IN ANY FORM OR MANNER WHATSOEVER.

Moody’s Investors Service, Inc., a wholly-owned credit rating agency subsidiary of Moody’s Corporation (“MCO”), hereby discloses that most issuers of debt securities (including corporate and municipal bonds, debentures, notes and commercial paper) and preferred stock rated by Moody’s Investors Service, Inc. have, prior to assignment of any rating, agreed to pay to Moody’s Investors Service, Inc. for ratings opinions and services rendered by it fees ranging from $1,000 to approximately $2,700,000. MCO and MIS also maintain policies and procedures to address the independence of MIS’s ratings and rating processes. Information regarding certain affiliations that may exist between directors of MCO and rated entities, and between entities who hold ratings from MIS and have also publicly reported to the SEC an ownership interest in MCO of more than 5%, is posted annually at www.moodys.com under the heading “Investor Relations — Corporate Governance — Director and Shareholder Affiliation Policy.”

Additional terms for Australia only: Any publication into Australia of this document is pursuant to the Australian Financial Services License of MOODY’S affiliate, Moody’s Investors Service Pty Limited ABN 61 003 399 657AFSL 336969 and/or Moody’s Analytics Australia Pty Ltd ABN 94 105 136 972 AFSL 383569 (as applicable). This document is intended to be provided only to “wholesale clients” within the meaning of section 761G of the Corporations Act 2001. By continuing to access this document from within Australia, you represent to MOODY’S that you are, or are accessing the document as a representative of, a “wholesale client” and that neither you nor the entity you represent will directly or indirectly disseminate this document or its contents to “retail clients” within the meaning of section 761G of the Corporations Act 2001. MOODY’S credit rating is an opinion as to the creditworthiness of a debt obligation of the issuer, not on the equity securities of the issuer or any form of security that is available to retail investors.

Additional terms for Japan only: Moody's Japan K.K. (“MJKK”) is a wholly-owned credit rating agency subsidiary of Moody's Group Japan G.K., which is wholly-owned by Moody’s Overseas Holdings Inc., a wholly-owned subsidiary of MCO. Moody’s SF Japan K.K. (“MSFJ”) is a wholly-owned credit rating agency subsidiary of MJKK. MSFJ is not a Nationally Recognized Statistical Rating Organization (“NRSRO”). Therefore, credit ratings assigned by MSFJ are Non-NRSRO Credit Ratings. Non-NRSRO Credit Ratings are assigned by an entity that is not a NRSRO and, consequently, the rated obligation will not qualify for certain types of treatment under U.S. laws. MJKK and MSFJ are credit rating agencies registered with the Japan Financial Services Agency and their registration numbers are FSA Commissioner (Ratings) No. 2 and 3 respectively.

MJKK or MSFJ (as applicable) hereby disclose that most issuers of debt securities (including corporate and municipal bonds, debentures, notes and commercial paper) and preferred stock rated by MJKK or MSFJ (as applicable) have, prior to assignment of any rating, agreed to pay to MJKK or MSFJ (as applicable) for ratings opinions and services rendered by it fees ranging from JPY125,000 to approximately JPY250,000,000.

MJKK and MSFJ also maintain policies and procedures to address Japanese regulatory requirements.

​​​​​​
Moodys.com