The Johns Hopkins Health System Obligated Group Series 2016 Taxable Bonds Rated #AA-#

Stocks and Financial Services Press Releases Tuesday October 25, 2016 08:51
NEW YORK--25 Oct--S&P Global Ratings

NEW YORK (S&P Global Ratings) Oct. 24, 2016--S&P Global Ratings assigned its 'AA-' long-term rating to The Johns Hopkins Health System Obligated Group's (JHHS) $500 million series 2016 taxable bonds. At the same time, S&P Global Ratings affirmed its 'AA-' rating on Maryland Health & Higher Educational Facilities Authority's series 2015A bonds, issued for JHMI Utilities LLC (JHMI) and guaranteed by JHHS. The outlook on all ratings is stable.

"The rating on JHHS reflects the system's very strong enterprise profile, evidenced by its excellent reputation as the academic medical center for Johns Hopkins University School of Medicine; its solid market position in a sizable and diverse service area; coupled with a consistent financial profile, highlighted by stable, albeit modest, operational performance for the past several years, with expectations for continued modest operating surpluses over the next two years based on management's projections; and adequate liquidity and financial flexibility compared with similarly rated peers," said S&P Global Ratings credit analyst Stephen Infranco.

While the debt from the series 2016 bond issue dilutes some key metrics in the short term, the overall credit profile remains consistent with the rating. However, in S&P Global Ratings' opinion, JHHS has reached its debt capacity at the current rating level and any additional debt, or weakening of key metrics beyond current levels could put pressure on the outlook or rating.

JHHS also operates under a global budget revenue agreement with Maryland's Health Services Cost Review Commission, which provides predictability of revenues for covered services and looks for the organization to reduce unnecessary volumes; however, S&P Global Ratings believes some uncertainty remains around reimbursement under the arrangement. In the rating service's opinion, the organization will need to leverage its size and expertise to manage volumes and costs to generate stable operating performance.

Certain terms used in this report, particularly certain adjectives used to express our view on rating relevant factors, have specific meanings ascribed to them in our criteria, and should therefore be read in conjunction with such criteria. Please see Ratings Criteria at www.standardandpoors.com for further information. Complete ratings information is available to subscribers of RatingsDirect at www.globalcreditportal.com and at www.spcapitaliq.com. All ratings affected by this rating action can be found on the S&P Global Ratings' public website at www.standardandpoors.com. Use the Ratings search box located in the left column.


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