October/November 2012

CHI Makes Largest-Ever Bond Issue


CHI issued approximately $1.5 billion in taxable bonds to finance an array of strategic initiatives, including virtual technologies, physician integration and partnerships and alliances in key areas across the country to strengthen local and regional networks of care. It is the largest bond issue in the history of CHI, and the largest taxable bond offering ever issued by a nonprofit health care organization.

“We consider this an essential investment in our future,” said Kevin Lofton, CHI president and chief executive officer. “This infusion of capital enables us to support the ambitious strategic plans we have developed to better serve our communities, improve the health of the people we serve, strengthen CHI through expanded capabilities, and continue our disciplined growth strategies.”

This is the first time that CHI has issued long-term, fixed-rate taxable bonds, which currently offer interest rates at historically low levels. Taxable bonds also can be issued more quickly through the market than most tax-exempt bonds, providing streamlined access to capital for both nonprofit and for-profit business lines and services.

“The proceeds will allow CHI to truly fulfill its strategic goals to improve and expand health care in every community it serves,” said Dean Swindle, CHI executive vice president for business services and chief financial officer. “It provides the flexibility we need to take advantage of future opportunities in a constantly changing health care environment.”

Though CHI has solid financial results and plans for strategic growth, the large bond issue resulted in a decline in its credit ratings – Fitch Ratings, from AA to Aa-, with stable outlook; Standard & Poor’s, from AA to Aa-, with stable outlook; and Moody’s Investors Service, from AA to Aa3, with stable outlook.

“We considered this downgrade a possibility,” said Swindle. “It’s part of dealing with a large issuance of debt in a difficult economy that is made even more volatile by the uncertainty over health reform. CHI still possesses a very strong rating from all three ratings agencies and solid prospects for the future.”